Mike Ashley’s Frasers Group acquires a 19% stake in AOWorld

Mike Ashley’s Frasers Group bought shares from Odey Asset Management to acquire a 19.1% stake in AO World.

Frasers purchased the shares for a total of £75 million. This will be added to their other investments, including Asos. Frasers has now become the second-largest AO shareholder, after Camelot Capital Partners with a stake of 20,4 per cent.

AO was founded by John Roberts in 1993, a former salesman for kitchen appliances who began the business after a £1 wager at a pub. It has become one of the leading online retailers for white goods, including microwaves.

Roberts described the investment as “a fantastic endorsement of our business”.

AO’s share price dropped more than a fifth last year and Atradius, AO’s credit insurer, canceled coverage for certain suppliers. Since then, the company has increased its profit forecast for the full year four times. In April, the online electricals retailer stated that it was expecting to achieve profits “at the upper end” of its target of up £45 million. AO’s stock price increased by 5 1/2p or 7.8 percent to close at $75p. Sky News reported first that Frasers acquired Odey Asset Management’s stake in the retailer.

Michael Murray is the CEO of Frasers Group. He said: “Frasers Group has admired the work that John and his team at AO have done for many years, and we’re delighted to be able to create a strategic, supportive partnership.”

“AO has a great business, with a very clear strategy that is leading the market in online-only electronic sales. Frasers will gain from AO’s electrical expertise and two-man deliveries, allowing us to grow our bulk equipment, homeware and other ranges.

Ashley officially stepped down from his position as director of Frasers last October to give day-to-day management to Murray, his son-in law.

Murray is looking to reposition Frasers in a more premium business. The company reported that its premium lifestyle brands saw sales grow by nearly 25 percent to just under PS530 million in the six-month period ending October.

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