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AO World to acquire Mobile Phones Direct for £32.5m

AO World has announced it is to acquire Mobile Phones Direct (MPD) for £32.5 million, subject to Financial Conduct Authority approval.

Following the deal, AO expects its mobile proposition to significantly increase in “scale and sophistication”, elevating it from the handsets-only business it currently operates as part of its wider consumer electricals range.

Both businesses involved in the deal operate online only, with MPD running two .co.uk brands: Mobile Phones Direct and Smart Phone Company.

Based in Thatcham, near Reading in the UK, MPD had approximately 13.6 million visitors in 2017, up from circa 11.6 million in 2016. The business generated revenues of £121.7 million and EBITDA of £5.5 million in the year ended 31 March 2018.

AO said it is currently adopting a strategy of developing existing categories and services, and adding new complementary categories to its offering for the benefit of its customers. This MPD acquisition is expected to complete prior to 31 March 2019.

The move also has echoes of Dixons Retail’s 2014 move to merge with Carphone Warehouse to bring together key electricals categories under one roof, although on a smaller scale and as a digital version of that model.

As part of the deal, AO said it is acquiring an “experienced management team and well-established eCommerce proposition, underpinned by relationships with UK mobile network operators and handset distributors”, as well as generating multiple opportunities for growth and synergies.

Steve Caunce, CEO of AO World, remarked: "Mobile Phones Direct already has a leading position within the UK online mobile phone market and is a business which is highly complementary to AO.

“In coming together, AO will achieve instant scale and be well-placed for future opportunities within a highly attractive and growing UK mobile phone market."

He added: “With 5G services expected to launch over the next two years and as the electrical products we sell become more connected than ever before, moving further into the mobile market is a logical next step for us."

In addition to growing its B2C business, AO is currently looking to develop its B2B offering. The Ao-business.com website recently created a dedicated team to serve trade customers, which features credit accounts and an array of products and services for the corporate world.

The organisation has ambitious plans to develop this part of its business in the months ahead.

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