Retail Insight Network

Ashley buys £75m stake in AO World, acquires OAM shares

Ashley's increased stake empowers his retail empire to shape AO World's future direction and decision-making.

Sports Direct and Evans Cycles owner, Mike Ashley's Frasers Group, has purchased an 18.9% stake in AO World through a £75m deal. The acquisition involved buying out shares previously held by troubled Odey Asset Management, making Frasers Group the second-largest shareholder in the online electrical retailer.

This move comes just a week after Frasers increased its stake in ASOS to nearly 10%.

Boosting online electronics offering

Michael Murray, the chief executive of Frasers Group and Ashley's son-in-law, stated that the deal with AO World would allow the retail empire to enhance its online-only electronics offerings.

AO World, headquartered in Bolton, specialises in selling household products such as fridges, washing machines, and televisions.

Positive outlook for partnership

John Roberts, founder and chief executive of AO World, expressed enthusiasm about the partnership, stating that it is excellent news for AO and a strong endorsement for their business. He looks forward to realising the significant potential that this partnership brings.

Shares purchased from troubled Odey Asset Management

Frasers Group reportedly bought the shares from Odey Asset Management, which has been facing difficulties following the departure of its founder, Crispin Odey, amidst allegations of sexual misconduct that he denies.

The deal between Frasers and AO comes after two years of negotiations.

Expanding retail empire

Mike Ashley's retail empire, which began with a single sports store in Maidenhead, now includes House of Fraser, Sports Direct, Jack Wills, Evans Cycles, and menswear retailer Gieves & Hawkes.

Ashley's recent acquisition of a 9.9% stake in Asos raises questions about the future of the online fashion retailer, which has experienced a significant decline in its share price over the past two years.

Asos, valued at just over £400m, is seen as a potential takeover target, particularly due to its ownership of the Topshop brand.

Confidence in AO World's prospects

Analysts at Jefferies view Frasers Group's interest in AO World as more than opportunistic, considering it a vote of confidence in the electricals retailer's prospects.

AO World shares have experienced a decline since the peak of the pandemic when consumers with additional savings invested in new technology. The reopening of physical stores, along with rising costs and supply chain disruptions, has impacted AO World's trading.

As a result, the company exited the underperforming German market and implemented cost-cutting measures, including reducing senior and middle management positions.