MusicMagpie (LON: MMAG) shares are up 34% at the prospect of a bidding war for the company. MMAG hsa put itself up for sale, they’vbe two potential bidders, so perhaps there will be some joy for shareholders after all. Which, given the fall in MMAG shares over the two years they’ve been on the market would be nice.
It’s entirely true that refurbing mobile phones can be value additive. It’s also true that those that cannot be refurbed still have value for the metals content in them - the copper, gold and so on. But given that this is so then why have the result been so bad? Which is where we get to that curse of any and every recycling system. It’s not, in fact, the recycling that costs the money. It’s getting the stuff to recycle that does.
It was the Telegraph, yesterday, that broke the news: “Second-hand smartphone seller musicMagpie is hunting for a buyer just two years after going public following the collapse of its share price and faltering US growth. The Stockport-based company, founded in 2007 by Steve Oliver and Walter Gleeson, has called in consultants from Deloitte to consider its options, including a private sale. Valued at over £200m in an initial public offering just over two years ago, musicMagpie’s share price has plunged and the business is now worth just £20m. Shares were trading at around 18p on Friday.”
MusicMagpie share price from Google Finance
The announcement today: “The Board of musicMagpie notes the recent speculation and confirms it is in early-stage discussions with both BT Group plc and Aurelius Group (together "the Parties") as to a possible offer to acquire the entire issued and to be issued share capital of musicMagpie. Discussions between the parties are ongoing and remain at a very early stage. Accordingly, there can be no certainty that any offer for the Company will be made from either of the Parties, nor as to the terms of any such offer. Accordingly, shareholders are advised to take no action at this time. A further announcement will be made as appropriate.”
The base difficulty is not in the repair or refurb of phones, nor in the selling - or scrapping - of them. It’s in the collection of them. That’s where all the money goes and that’s what is always true of any recycling project. How do you get people to send you their old mobile? There is, in fact, no easy - or at lest no cheap - answer to this. Anyone who cracks that collection network problem will have a fortune at their feet.
