Frasers Group’s £75 million deal for AO World stake sends shares increased
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hares in AO World and Frasers Group have lifted increased after Mike Ashley’s retail empire purchased a £75 million stake within the on-line white items retailer.
Frasers, the dad or mum agency of Sports Direct, House of Fraser and different manufacturers, has snapped up an 18.9% stake in AO.
The deal, introduced after markets closed on Friday, noticed the retail big purchase 109.4 million AO shares at 68p.
The stake acquisition contains shares within the expertise retailer beforehand owned by crisis-hit hedge fund Odey Asset Management, it’s understood.
The fund bought off its stake to lift cash amid the fallout from misconduct allegations in opposition to its founder Crispin Odey, who left the fund over the weekend.
Mr Odey denies the allegations.
Frasers, which is majority-owned by Mr Ashley, has a historical past of funding partnerships in different retail manufacturers, similar to Asos and Hugo Boss.
It mentioned the deal comes after two years of talks with AO relating to a possible deal.
Michael Murray, chief government of Frasers, mentioned: “Frasers has long admired what John and the AO team have built and we are delighted to have the opportunity to form a supportive, strategic partnership.
“AO is a fantastic business with a clear strategy which is leading the market in online-only electricals.”
John Roberts, founder and chief government of AO, mentioned: “This is great news for AO and a fantastic endorsement for our business.
“As we continue to build on our strategy of pivoting to profitable growth, it will be hugely exciting to have a range of compelling strategic opportunities to explore together and we’re very much looking forward to working with Michael and his team.”
Andrew Wade, fairness analyst at Jefferies, mentioned: “Frasers’ interest in AO is clearly more than opportunistic and with AO’s pivot-to-profit strategy putting the business in a much stronger position, we are inclined to see this development as a catalyst for collaboration between the two businesses – as well as further recognition that AO’s shares offer upside potential.”
Shares in AO jumped 7.5% increased consequently on Monday morning, whereas Frasers shares improved by 1%.