AO World to take over MusicMagpie for £10m

2nd Oct 2024 07:27

(Sharecast News) - Household appliances retailer AO World is to take over struggling refurbished electrical and media reseller MusicMagpie for £10m.

AO World is offering 9.07p in cash per share for the company, representing a 58% premium to the closing price of 5.75p on Tuesday and a 48% premium to the three-month average closing price of 6.12p.

MusicMagpie, which is involved in the reselling of consumer tech like phones, smart watches and laptops, as well as physical media like CD, DVDs, videogames and books, has seen its share price drop 45% since the start of the year due to challenging trading conditions and a drop in revenues. The stock is 72% lower than it was last October.

The deal, which has received the recommendation of MusicMagpie's directors, has already received irrevocable undertakings and letters of intent to vote in favour representing 54% of the total issued share capital. AO said it expects the deal to close in the first quarter of 2025.

The bolt-on acquisition will help broaden AO's operations in the mobile and consumer technology space, with the retailers having "highly complementary business models", AO said in a statement.

MusicMagpie's chair Martin Hellawell said the board was pleased to recommend the takeover offer, which was a "result of musicMagpie's extensive process to seek an acquiror for the business and represents an opportunity for shareholders to realise their holdings in full and in cash at a significant premium to the prevailing share price".

AO chief executive 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."