AO acquires Mobile Phones Direct for £32.5 million

European online electrical retailer AO has acquired Mobile Phones Direct (MPD) for £32.5 million.

MPD is a leading online-only retailer of mobile phones in the UK, and is based in Thatcham, near Reading. It operates through two online brands, Mobile Phones Direct and Smart Phone Company.

MPD’s websites had approximately 13.6 million visitors in 2017, up from approximately 11.6 million in 2016. It generated revenues of £121.7m and EBITDA of £5.5m in the year ended 31 March 2018 with revenue CAGR of 24% (2016-2018).

“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,” said AO.

The acquisition will significantly increase the scale and sophistication of AO’s mobile proposition, which is currently limited to the sale of handsets only (without airtime or associated services).

AO says 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”. It also provides access to a large market which is adjacent to AO’s current electricals offering.

“This deal represents a significant step forward in our strategy of developing our growing range of online electricals and adding new complementary categories that customers want and expect from AO,” said Steve Caunce, CEO of AO World Plc.

“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.

“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.”

Richard Baxendale, current CEO of Mobile Phones Direct, added: “This new venture marks an exciting moment for both AO and Mobile Phones Direct, creating something that we believe will be a real game changer for the industry. MPD’s experience of the mobile market will give AO a fantastic platform to expand this category and will crucially, enable both of us to offer an even more compelling proposition to our customers.”

The acquisition is expected to complete prior to 31st March 2019.

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