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AO World Share Rose 6.3% on Frasers Group Strategic Investment

Simon Mugo trader
Updated 12 Jun 2023

The AO World PLC (LON: AO) share price rose 6.28% after Frasers Group acquired an 18.9% strategic stake in AO, purchasing 109,400,000 issued shares at a price of 68p, totalling an investment of £75 million.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


AO shares did not fall on news of the acquisition despite the price offered to Frasers Group being slightly lower than its Friday closing price. The rally higher in AO shares was driven by investor optimism about the potential growth the company could reap from the partnership.

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The last significant announcement from AO World regarded its trading update for the 2023 full year ended 3 March 2023. The online-only electrical retailer generated revenues worth £1.13 billion for the entire year, which was in line with its expectations. 

AO World noted that its initiatives to reduce costs and improve its margins were paying off despite the company not announcing a solid profit during the past year. The firm got its £80 million revolving credit facility renewed by Natwest, HSBC and Barclays. 

Michael Murray, CEO of Frasers Group, said: “Frasers has long admired what John and the AO team have built, and we are delighted to have the opportunity to form a supportive, strategic partnership. 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. In turn, AO will have the opportunity to benefit from Frasers' expertise and ecosystem.”

John Roberts, Founder and CEO of AO, said: “This is great news for AO and 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. 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.”

*This is not investment advice. 

AO World share price. 

The AO World share price edged 6.28% higher to trade at 73.63p, from Friday’s closing price of 69.28p.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading