AO World is to buy online phone retailer Mobile Phones Direct for £32.5m as it turns up pressure on Dixons Carphone.
Mobile Phones Direct, which also operates Smart Phone Company, turned over £121.7m and made £5.5m at EBITDA level in the year ended March 31.
The company said the acquisition significantly increased “the scale and sophistication” of its mobile proposition, which is currently limited to the sale of handsets, without airtime or associated services.
The acquisition ties in to AO’s strategy of adding new complementary categories and provides access to what it termed a “large and important” market, adjacent to its core electricals offer.
AO World chief executive Steve Caunce said: “This deal represents a significant step forward in our strategy of developing our growing range of online electricals and adding new complementary categories that customers want and expect from AO.
“Mobile Phones Direct already has a leading position within the UK online mobile phone market and is a business which is highly complementary to AO. In coming together, AO will achieve instant scale and be well-placed for future opportunities within a highly attractive and growing UK mobile phone market.”
The Internet of Things was also a factor for the deal.
Caunce said: ”With 5G services expected to launch over the next two years and as the electrical products we sell become more connected than ever before, moving further into the mobile market is a logical next step for us.”
The acquisition is expected to complete by March 31 next year.