20th Nov 2023 13:10
(Alliance News) - musicMagpie PLC's transition from a used CD and DVD seller to one of refurbished versions of most-used and best-loved pieces of technology has made it a logical takeover target for BT Group PLC.
The used-technology reseller said it was in "early stage discussions" with telecommunications provider BT Group PLC and asset manager Aurelius Group for the pair to make a takeover offer.
Shares in musicMagpie surged 24% on the news to 23.30 pence each in London on Monday afternoon, giving it a market capitalisation of GBP25.1 million. BT shares were up 0.3% at 119.25p each.
Talks are "ongoing and remain at a very early stage", musicMagpie said, adding there was no certainty that an offer will be made. musicMagpie said BT and Aurelius have a deadline of December 18 to announce a firm intention to make an offer or walk away.
"Few people would have predicted Redde Northgate would be sniffing around Halfords, and BT around Musicmagpie, but taking a step back there is some logic behind such tie-ups," said AJ Bell analyst Russ Mould, also referring to van rental firm Redde Northgate PLC making a GBP1.4 billion merger approach to bicycle and car supplies and repair shop chain Halfords Group PLC, according to a report in the Telegraph.
Mould continued: "For Musicmagpie, the business 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."
musicMagpie first listed on AIM in London in April 2021 with an initial public offering price of 193p per share. It steadily declined until plunging in late February 2022 to a low of 42.5p at the start of April 2022. It has since fluctuated in performance, reaching an all-time low of 10.1p in November last year.
Mould said Aurelius was involved in the proposed deal as it is "perhaps interested in taking the retail side of the group which sells goods via its own website and through Ebay and Amazon".
By Greg Rosenvinge, Alliance News senior reporter
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