MusicMagpie shares soar as it reveals rival bids from Aurelius and BT
- MusicMagpie has struggled to become profitable and has seen sales slow down
- The Stockport-based electronics retailer said discussions were at a ‘very early stage’
- Since the company’s flotation on the LSE two years ago, the company’s value has fallen sharply
MusicMagpie has confirmed that discussions are underway over a possible sale to BT Group or investment company Aurelius.
The Stockport-based company, known for selling second-hand electronics, said discussions were at a “very early stage” and there was “no certainty” an offer would be made by either party.
Since MusicMagpie floated on the London Stock Exchange two years ago, the company’s value has plummeted by around 87 per cent as the easing of Covid-related restrictions and economic uncertainty have led to a slowdown in trading.
Founder: MusicMagpie was founded in 2007 by Walter Gleeson and Steve Oliver (photo).
It has also struggled to become profitable due to higher costs in sourcing goods and increasing use of third-party platforms such as Amazon, eBay and BackMarket.
In the six months ending in May, MusicMagpie saw pre-tax losses more than triple to £3.2m and turnover fall by £9m to £62m.
Sales of books and disc media fell faster than expected, falling by £4.4 million to £20.8 million, while demand for consumer technology goods fell by £4.8 million to £41.2 million.
The group attributes the overall half-year performance to weak consumer confidence and the postal strikes around Christmas and New Year.
It warned that trading conditions remained challenging but said annual forecasts were expected to be met due to cost savings, improving momentum and a focus on high-margin sales.
MusicMagpie shares rose 26 percent to 23.7p on Monday morning after announcing takeover talks, putting them among the top five gainers on the Aim All-Share Index.
One of the possible suitors, Lloyds Pharmacy owner Aurelius, has just agreed to acquire The Body Shop, the beauty retailer famous for selling vegan cosmetics, from Brazilian owner Natura & Co in a £207m deal.
Both Aurelius and BT have until 5pm on December 18 to make a firm proposal to MusicMagpie or say they’re walking away.
Russ Mould, investment director at AJ Bell, said: ‘BT and its mobile brand EE deal in large volumes of phones, so it would make sense to have an in-house refurbishment business in the form of MusicMagpie.
“It also helps that the latter is going cheap, as that has been a disaster since it hit the stock market a few years ago.”
MusicMagpie was founded from a Stockport garage by Walter Gleeson and Steve Oliver, who had been directors of entertainment retailer Music Zone until its collapse in 2007.
Starting as a CD and DVD reseller, the company quickly received a boost when Martin Lewis recommended the company on television.
A £10 million cash injection from private equity group LDC in 2011 helped the group expand the fund into North America, where it trades as Decluttr.
It now sells everything from phones to laptops, smartwatches and gaming consoles, and also offers subscription services that allow customers to rent electronics.