MusicMagpie in early takeover talks

Stockport-headquartered retailer and recycler Music Magpie is in possible takeover talks with BT and private equity investor Auerlius Group it has confirmed to the stock market this morning.

“The Board of musicMagpie notes the recent speculation and confirms it is in early-stage discussions with both BT Group plc and Aurelius Group as to a possible offer to acquire the entire issued and to be issued share capital of musicMagpie.”

Last week Aurelius completed the acquisition of a mainstay of the UK high street, The Body Shop, at the knock down price of £207m, and boasts of being able to complete “many complex corporate carve-outs across Europe”, including the acquisitions of renowned brands such as Footasylum from JD Sports and LSG Sky Chefs (LSG Group) from Deutsche Lufthansa AG.

Chief executive Steve Oliver has pioneered the recycling and refurbishment of games consoles and mobile devices, repositioning the business as a re-commerce business.

Oliver declined to comment when contacted by TheBusinessDesk.com.

The board are likely to regard any offer based on the current share price of 18p as an undervaluation, particularly with the analysts consensus indicating annual pre-tax profits likely to come in at £8m, on top of last year’s £6.5m.

“Discussions between the parties are ongoing and remain at a very early stage.  Accordingly, there can be no certainty that any offer for the Company will be made from either of the Parties, nor as to the terms of any such offer. Accordingly, shareholders are advised to take no action at this time.  A further announcement will be made as appropriate.”

Russ Mould, investment director at Manchester-based investment platform, AJ Bell, said: “Musicmagpie has evolved from selling CDs and DVDs for pennies to one that sells, fixes and rents out mobile phones and other electronic devices.

“BT and its mobile brand EE deal in large volumes of phones, so having an in-house refurbishment business in the form of Musicmagpie would make sense. It also helps that the latter is going cheap, having been a disaster since it joined the stock market a few years ago.

“Private equity group Aurelius is also in on the ticket to potentially buy Musicmagpie, perhaps interested in taking the retail side of the group which sells goods via its own website and through Ebay and Amazon.”