MARKET REPORT: Hut Group shares rocket after £1.6bn Softbank tie-up

Almost £700million was added to the value of The Hut Group (THG) after it signed a £1.6billion tie-up with Japanese technology powerhouse Softbank.

Investors cheered the news, sending its stock rocketing as much as 15 per cent in early trading. And the deal was greeted warmly by analysts too.

THG announced after the market shut on Monday that Softbank would be the cornerstone backer of a £710million fundraising, which will allow the beauty and protein shake specialist to go on a takeover spree. It also said it had bought Bentley Laboratories, a US beauty firm, for £180million.

Investors cheered Hut Group’s £1.6bn tie-up with Japanese technology powerhouse Softbank, sending its stock rocketing as much as 15 per cent in early trading

On top of the £516million Softbank spent on THG shares, making the Japanese group a top-six investor, it has secured the rights to invest another £1.1billion in technology division Ingenuity.

The deal values Ingenuity, which provides tech such as websites and logistics systems that enable companies including Homebase, Nintendo and Nestle to sell their wares online, at £4.5billion. 

Barclays said Softbank taking an option in Ingenuity was ‘a validation of the entire premise of Ingenuity from a very large global tech investor’.

Stock Watch – Renishaw 

Shares in precision instruments maker Renishaw fell 6.7 per cent, or 405p, to 5625p following reports it is struggling to attract takeover suitors.

The FTSE 100 engineer put itself up for sale in March after its two founders decided that they wanted to sell their 53 per cent stake.

But Bloomberg reported that the firm had received only a few bids by a mid-April deadline and that several prominent rivals had declined to make an offer – sending the stock into reverse.  

The fundraising provides it with financial ‘flexibility and firepower’ for its planned acquisition binge, analysts at Davy added.

THG was founded by fitness fanatic Matt Moulding in 2004 and now owns brands including beauty subscription service Glossybox and shakes company My Protein.

It listed last September at 500p per share. THG rocketed by 11.9 per cent, or 71p, to 667p, taking its market value from around £5.8billion on Monday to nearly £6.5billion.

The wider market sank as worries about inflation further stoked a bruising global sell-off.

The London Stock Exchange Group was the sole FTSE 100 riser, advancing less than 1 per cent, or 4p, to 7080p.

The Footsie fell 2.5 per cent, or 175.69 points, to 6947.99, while the FTSE 250, which had just ten risers yesterday, fell 2.3 per cent, or 530.05 points, to 22,167.14

The pan-European Stoxx 600 had its worst day since December as it lost 2.1 per cent, while Wall Street indexes including the Nasdaq and Dow Jones were also in the red.

British Airways-owner IAG sank after it raised £709million through a bond – the latest cash call it has made to stay afloat since the pandemic struck.

It expects travel to pick up in July. Shares tumbled 7.4 per cent, or 15.53p, to 194.32p.

It was a mixed day for Deliveroo. On one hand, the takeaway group was boosted by three positive broker notes as analysts at Jefferies, Bank of America and Numis all initiated coverage of the company, which suffered a disastrous stock market float in March. 

All three investment banks slapped a ‘buy’ rating on its stock, and Jefferies dubbed it the ‘definitive online food company’ on course to thrive in an increasingly competitive field.

Deliveroo rose 0.8 per cent, or 2p, to 249p, which is still far from the price targets of between 335p and 400p brokers put on its shares.

But it also emerged that Exodus Point Capital Management has shorted 0.56 per cent of its stock.

The short position, worth around £24million, is betting Deliveroo shares will fall.

Joules jumped 6.6 per cent, or 17p, to 276p as online sales and a boom in shoppers visiting its stores since lockdown lifted led the retailer to upgrade its annual forecasts.

The fashion staple said that revenue and profit will be ahead of analyst estimates of £187million and £4million respectively.

Capita, down 3.4 per cent, or 1.48p, to 41.8p, made more progress in an ambitious turnaround strategy as it poached rival G4S finance director, Tim Weller. He joins today.

This post first appeared on Dailymail.co.uk