RE: Demerger options????8 Dec 2024 08:46
The prospectus for the demerger explains the Offer with a good example of a share holder who owns 1,000,000 THG ordinary shares (as you do!):
This is my understanding of how it works
Options:
1) Take up the offer (guaranteed entitlement) to receive B shares, which become Ingenuity shares when business is split.
- Receive 133,756 B shares, which become Ingenuity shares (which is a private, unlisted company)
- THG reduce your share holding to 866,244 shares (in the remaining 2 divisions)
2) Make no election (default selection)
- Continue to hold 1,000,000 THG shares (in 2 remaining divisions)
- Receive a proportional increase in share holding (not number of shares), as the split will eliminate "in excess of all the dilution occasioned by the fundraise" (£95.4m gross raised to spin off Ingenuity with "sufficient funds through to cash flow breakeven")
3) Elect to receive more or less than the Guaranteed Entitlement of Ingenuity shares in exchange for a commensurate reduction of increase in the proportional holding of ordinary THG shares.
eg Elect to receive 10% of holding as B shares
Receive 100,000 Ingenuity
Retain 900,000 THG shares
eg Elect to receive 20% of holding as B shares
Receive 200,000 Ingenuity shares - subject to scale backs
Retain 800,000 THG shares
I'm going for the default selection as I don't want to hold unlisted shares in my portfolio. These aren't valued as such and will be hard to trade (also can't hold in an ISA) I also believe that the remaining 2 sections - Beauty and Nutrition will be worth significantly more, without trying to support Ingenuity, which is a financial drain on the organisation.
So yes, in effect giving away 1/3 of the business in my shareholding for nothing (and no doubt Moulding and other large shareholders and funds will spin this off or IPO it and make a fortune at some point in the future), however it should unlock value in THG and allow the share price to re-rate in the New Year.
Just my view, for what its worth.
Good luck to all PIs, hopefully your decision will be rewarding.
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