AO World agrees to buy musicMagpie for £10 million

AO World has agreed to buy the gadget recycler musicMagpie for £10 million as small and medium-sized companies listed in Britain attract a record number of takeover bids.
The online electricals group has made a cash bid of 9.07p a share. It comes just three years after musicMagpie listed at 193p a share, giving it a valuation of £208 million.
AO World’s offer represents a premium of 58 per cent to musicMagpie’s most recent closing share price and will hand Steve Oliver, the musicMagpie founder who holds a stake of 11.19 per cent, a payout worth around £1.1 million.
John Roberts, chief executive of AO World, said: “To achieve our strategic ambition of becoming the destination for electricals, it is crucial for AO World to enhance its consumer tech offering.
“I am excited to welcome Steve and the musicMagpie team into the AO family and to realise the potential that our combined efforts can unlock.”
Oliver started the business in 2007 with Walter Gleeson after noticing that while sales of new CDs were declining, there was a market for old CDs and games. He made around £12 million from selling shares at the float in 2021.
Shares in musicMagpie rose on Wednesday morning by 50 per cent, or 2¾p, to 8½p.
Analysis by Peel Hunt has found the UK’s FTSE 350-listed companies have been subject to a record number of takeover bids this year with a total value of £47 million. Companies including DS Smith, Hipgnosis and Wincanton have sparked bidding wars while others such as Anglo American, Currys, Direct Line and Rightmove have all spurned potential suitors.
Bidders have been willing to put forward substantial premiums for assets, with Wincanton, Spirent and International Distributions Services, the Royal Mail owner, attracting premiums of 104 per cent, 86 per cent and 73 per cent respectively.
Charles Hall, head of research at Peel Hunt, said: “It has been particularly noticeable that corporates have been the main acquirers. This suggests greater confidence in the economic outlook and the interest rate environment. It also suggests the attractiveness of UK companies and the potential for synergies in a low-growth environment.
“It has been surprising to see relatively low activity from private equity, given the $4 trillion of dry powder currently available. We expect this to change as financing conditions improve, which means that private equity is likely to be a more active acquirer going forward.”