AO bagged itself a bit of a bargain as it acquired MPD (Mobile Phones Direct), an online-only mobile phone retailer, for more than £38 million. The news came out shortly before AO announced its biggest sale ever ahead of one of the busiest trading periods of the year.
The transaction involves £21m in cash and 13.1 AO shares; news of the deal caused the value of AO’s stock to sink from a high of £135 to £113.40 yesterday morning. It has since recovered to just over £120 at the time of writing.
Sites operated by MPD received an estimated 13.6 million visitors in 2017 and have a consolidated customer base of 1.3 million. Established competitors Buymobiles, Carphone Warehouse (which owns Mobiles.co.uk) but also price comparison websites like Uswitch and Moneysavingexpert.
Owning an established independent brand
AO explained that the two companies complemented each other as AO.com has already started to sell SIM only smartphones, stopping short from offering a full roster of smartphone contracts.
Bolting MPD will add another dimension to AO’s mobile proposition, giving it the sort of clout that an online retailer of this size can legitimately aspire to.
Online now accounts for more than a third of all the smartphone contract sales according to research data shared by the company and that percentage is only going to grow as pressure on profit margins rise.
AO added in a statement that the acquisition is a “significant step in AO’s strategy of developing existing categories and services, and adding new complementary categories to its offering for the benefit of customers and that “MPD has an experienced senior management team, large customer base and strategic relationships with key mobile network operators and mobile phone distributors in the UK”.
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