US Edition
BT is in talks to acquire musicMagpie after the second-hand smartphone seller’s share price collapsed and efforts to expand in the US stalled.
Shares in the gadget refurbishment business surged by a third on Monday morning after it confirmed the business was considering bids that could lead to a potential sale.
The Sunday Telegraph revealed musicMagpie had hired Deloitte to explore a possible private sale after the company’s efforts to crack the US market with its Decluttr brand stalled and revenues fell.
MusicMagpie went public just two years ago at a valuation of £200m, but its shares have since collapsed, leaving the business worth just £20m.
The company began as a venture reselling old DVDs and CDs, but has since expanded into refurbishing and recycling used mobile phones.
Talks with BT come as the telecoms giant looks to expand its consumer division EE’s presence in the market for second hand smartphones.
On Monday, musicMagpie confirmed it was in “very early stage” discussions about an offer from BT and a separate bid from German investor Aurelius Group to buy all its shares. The company said there was “no certainty” of a deal.
City sources have suggested a deal to buy musicMagpie could ultimately be worth around £40m.
Revenues at musicMagpie fell 14pc to £61.9m in the first half of 2023, down from £71.3m a year earlier. Sales at its legacy business of buying and selling old DVDs have plunged sharply amid the rise of internet streaming services.
The company also blamed strikes at Royal Mail for disrupting deliveries earlier this year.
Sales at its US arm fell from £18.4m to £14.7m in the first half of 2023. It reported a £2.8m loss over the period and is currently sitting on £13.6m in net debt.
Founded out of a garage in Stockport by Steve Oliver and Walter Gleeson in 2007, musicMagpie has since grown to around 700 staff. It claims to have upcycled over 400,000 consumer tech gadgets.
Shares in musicMagpie were up 32pc on Monday morning to as high as 26p.
A BT spokesman declined to comment. Aurelius also declined to comment.