Frasers tried to gatecrash AO World cash call
FRASERS, the retail group controlled by billionaire Mike Ashley, held talks about backing a £40million fundraising launched by online electrical retailer AO World last week.
City sources said Frasers was ‘trying to get involved’ either by underwriting the deal or buying shares.
Sources speculated that Frasers may have been seeking a relationship with AO World and could use any shareholding as leverage. It may have had a long-term goal of taking control of the business, one said.
Ashley’s group owns Studio Retail, which sells electrical goods. It also sells a smaller range through his department store House of Fraser. ‘There was discussion at some point about underwriting the fundraising and there were talks about Frasers’ involvement as recently as this week,’ said one source.
Frasers has snapped up shares in a string of firms, most recently raising its stake in Hugo Boss to about £750million.
Ashley acquired House of Fraser after initially taking an 11 per cent stake in 2014. Four years later he seized control of the business shortly after offering it an ‘emergency’ cash injection as it neared collapse.
His acquisition of Studio Retail and video game retailer Game followed similar patterns.
He also built up a stake of almost 30 per cent in Debenhams before trying to take the reins. But the strategy backfired when the department store chain collapsed, leaving his company an estimated £150 million out of pocket. Ashley has been described as someone who ‘likes to park his tanks on people’s lawns’.
AO World founder and chief executive John Roberts launched the surprise fundraising on Thursday to strengthen its finances after reports that credit insurers had pulled cover. The leak led to a slide in the share price.
Roberts said City investors had given the company ‘a strong endorsement’.
He said the fundraising was a ‘sensible piece of financial housekeeping’ given the general economic uncertainty.
AO declined to comment. Frasers did not respond in time for publication. AO World shares are at 43p – the same as the offer price and down 28 per cent in the week.