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BT is in talks to purchase smartphone reseller musicMagpie, sending the Intention-traded firm’s shares up greater than 30 per cent on Monday morning after two years of sinking efficiency.
The discussions come after EE, the telecoms group’s cell and retail division, final month introduced it could promote kitchen home equipment from subsequent yr along with the leisure merchandise comparable to laptops, cameras and good TVs it already sells. It additionally plans to develop its gaming, insurance coverage and subscription providers.
MusicMagpie, which sells second-hand computer systems, consoles, tablets, CDs, DVDs, video games and books in addition to telephones, stated it was in early-stage discussions with each the telecoms group and Aurelius, the non-public fairness proprietor of The Physique Store, a couple of doable provide.
The talks come simply over two years after the corporate introduced it was itemizing on the London Inventory Alternate and looking for a market capitalisation of greater than £200mn. Since then its shares have plunged, leaving the Stockport-based group value about £20mn.
James Barford, head of telecoms analysis at Enders Evaluation, stated any acquisition could be “very small” from BT’s perspective however that the FTSE 100 firm was “seemingly desirous about bulking up its presence within the refurbished/recycled smartphone market, an space that all the operators have taken extra curiosity in just lately”.
Prospects can promote and purchase items on musicMagpie’s platforms, with the corporate refurbishing merchandise earlier than reselling them. It additionally operates a tech trade-in service for companies, wherein it recycles outdated expertise.
MusicMagpie has suffered declining gross sales in latest months, due partially to weaker UK client confidence and the influence of postal strikes earlier this yr.
Within the first half of its monetary yr, revenues fell to £61.9mn, down from £71.3mn a yr earlier, whereas gross sales from its outdated enterprise targeted on second-hand CDs and DVDs dropped by a much bigger than anticipated 17.4 per cent. The corporate stated DVD and videogame gross sales had been hit onerous by streaming, falling greater than 22 per cent within the interval.
The corporate has additionally been attempting to interrupt into the US market, by way of its American enterprise Decluttr, and sells merchandise by means of ecommerce web sites comparable to eBay and Amazon.
Analysts at Shore Capital, which is appearing as musicMagpie’s nominated adviser and dealer, have listed the corporate’s enterprise worth as £33.8mn. BT and Aurelius had till December 18 to make a bid or announce that they every don’t intend to make a suggestion, musicMagpie stated. It added there was no certainty that a suggestion could be made, or what the phrases could be.
Kester Mann, director of client and connectivity at CCS Perception, stated the potential deal mirrored the burgeoning marketplace for second-hand units, with contributing elements together with the rising residual worth of smartphones, widespread trade-in schemes, larger availability, cost-of-living issues and environmental concerns.
Regardless of this being “an business progress alternative, a possible transfer by BT comes as a little bit of a shock”, he added, citing the telecoms group’s emphasis on its rollout of full-fibre broadband.
BT and Aurelius each declined to remark.
