Mike Ashley’s Frasers Group has taken an 18.9% stake in the online electricals retailer AO World in a £75m deal involving buying out shares held by crisis-hit Odey Asset Management.
Frasers Group, the parent of brands from Sports Direct to Evans Cycles, said the deal was part of a strategic partnership that the two companies have been in talks about forming for two years.
The Bolton-based AO World, which was founded in 2000 as Appliances Only by John Roberts, is the biggest seller of large domestic appliances in the UK.
“Frasers has long admired what John and the AO team have built, and we are delighted to have the opportunity to form a supportive, strategic partnership,” said Michael Murray, the chief executive of Frasers Group.
“Through this investment, Frasers will benefit from AO’s valuable knowhow in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges.”
Frasers Group is understood to have acquired shares from Odey Asset Management, as the business reels from the departure of founder Crispin Odey after allegations of sexual misconduct, which he denies.
The deal makes Frasers the second-largest shareholder in AO World, behind Camelot Capital Partners, with a 20.4% stake, and ahead of Roberts, with an 18.3% stake, according to data from Refinitiv.
The deal comes a week after Frasers Group increased its stake in Asos to 9%, making it the third-largest shareholder, before a potential battle for control of the ailing online fashion business
AO World, which has faced tough conditions as the cost of living crisis restrains household spending, said the investment was a vote of confidence in the business.
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“This is great news for AO and a fantastic endorsement for our business,” said Roberts, the chief executive. “[We]look forward to realising the significant potential that we see for this partnership. As we continue to build on our strategy of pivoting to profitable growth, it will be hugely exciting to have a range of compelling strategic opportunities to explore together.”
