British e-commerce firm THG plans to spin off technology services arm, shares tumble

British e-commerce firm THG said Tuesday that it is looking to spin off its technology platform, Ingenuity, in a blow to founder Matthew Moulding's vision to build a large publicly-listed technology name in the U.K.

THG, which was previously known as The Hut Group, said in an investor update Tuesday that it is "actively undertaking detailed work to review potential structures to facilitate the demerger of THG Ingenuity."

"At this stage no certainty can be provided on a demerger timescale whilst we consider the options to achieve this outcome, however, structuring tax clearances have now been approved by HMRC," the U.K.'s tax collection authority, THG added.

Any proposed demerger would require shareholder approval, the firm said, adding that further information on its proposal to spin off the business will be provided to shareholders in due course.

If and when the demerger is approved, THG's group company will consist of only its THG Beauty and THG Nutrition divisions. The company believes this will simplify its structure and help investors understand the business better.

Shares of THG closed down more than 12% Tuesday on the back of the news.

THG formed THG Ingenuity in 2021 as a separate venture selling e-commerce solutions for retailers. THG's Moulding has previously described THG Ingenuity as a "social media influencer platform" to promote products, including brands sold by THG as well as those sold by other companies, too.

The venture was formed with the help of Japanese tech investing heavyweight SoftBank, which in May 2021 bought an 8% stake in THG for £481 million. The deal at the time gave SoftBank the option to invest an additional $1.6 billion in THG Ingenuity.

However, in October 2022, SoftBank ended its investment