Frasers Group takes £75m stake in AO World

Frasers Group has taken a £75m stake in online electrical retailer, AO World, sending shares in both companies soaring on Monday morning.

Mike Ashley’s retail empire, which owns brands including Sports Direct and House of Fraser, bought the 18.9% slice of equity in AO from Odey Asset Management.

It bought 109.4 million AO shares at 68p following talks between the two companies over two years.

Michael Murray, chief executive officer of Frasers Group, said the company had long admired what AO had built. 

“AO is a fantastic business with a clear strategy which is leading the market in online-only electricals. Through this investment, Frasers will benefit from AO’s valuable know-how in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges.”

Bolton-based AO World, which was founded in 2000 by John Roberts, specialises in household appliances and electrical goods.

John Roberts, founder and chief executive officer of AO, hailed the deal as a “fantastic endorsement for our business”.

“We are delighted to welcome Michael and the wider Frasers team into the AO family and look forward to realising the significant potential that we see for this partnership,” Roberts said. 

He added: “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, and we’re very much looking forward to working with Michael and his team.”