London-listed online retailer Musicmagpie will be snapped up by AO World as the electrical supplier looks to enhance its presence in consumer tech.
AO World today announced it has agreed on a deal – valued at £9.9m – to acquire the entire issued and to be issued share capital of Musicmagpie, which specialises in consumer tech and disc media.
Under the deal terms, each Musicmagpie shareholder will be entitled to receive 0.09p. Mike Ashley’s Frasers Group is the largest shareholder in AO World.
It comes after a previous deal for the second-hand smartphone seller fell through last year with BT Aurelius Group, who did not give a reason for a change in direction.
Chief executive of AO, John Roberts, said: “To achieve our strategic ambition of becoming the destination for electricals, it is crucial for AO to enhance its consumer tech offering.
“A top-tier trade-in service will be essential, and Musicmagpie represents a significant enabler in unlocking value through our reverse supply chain.”
The Bolton-headquartered group posted a pre-tax profit earlier this year of £36.4m, up from £7.6m, which surpassed forecasts.
However, AO reported in its annual results to March 31, 2024, that its revenue had fallen from £1.1bn to £1bn.
Roberts said Musicmagpie can help leverage AO World’s existing supply channels, ultimately lowering the cost of acquisition as operations and values align.
Revenue at Musicmagpie dropped 13 per cent to £53.8m, down from £61.9m, in the first six months of 2024 as the company struggled in the highly competitive second-hand market.
Its UK consumer technology sales ticked up to £28.7m (H1 2023: £28.6m), but its US consumer technology sales were £1.6m, down from £8.5m.
Commenting on the recommended acquisition, chief executive and co-founder of Musicmagpie, Steve Oliver, said he considered AO World to be a “natural custodian” for the business.
Oliver added: “AO is a highly trusted consumer brand that shares our commitment to providing a first-rate service for customers.
“I am very proud of the Musicmagpie business and the trusted brand that we have created, providing consumers with a smart, sustainable and trusted way to buy, rent and sell refurbished consumer technology and physical media products.”