- Currys rejects Elliott’s offer
- Sales decline amid crisis
- JD.com shows interest
Currys has declined Elliott’s second takeover proposal, stating that the electronics retailer was “substantially undervalued.”
Elliott increased the retailer’s valuation from £700 million earlier this month to approximately £757 million.
The British firm is in competition with Chinese rival JD.com, which has also indicated interest in acquiring the American company.
Sales at Currys, which has more than 800 locations worldwide, have slowed as a result of the cost-of-living crisis.
The company reported that sales decreased by 3% during the traditionally active Christmas season compared to the same period last year.
Currys, similar to many other businesses on the High Street, has experienced declining sales as consumers have reduced their expenditures.
Elliott, a firm that acquired Waterstones in the United Kingdom in 2018, has a renowned status as an activist investor, which entails the pursuit of companies with the intention of acquiring them and implementing managerial changes.
Currys was valued at 67p per share in the US firm’s most recent offer, an increase from its previous offer of approximately 62p per share.
On Tuesday, Currys confirmed in a statement that Elliott had presented it with a second offer.
“After careful evaluation by the Board of Currys and its financial advisers, the Second Elliott Proposal was determined to be a substantial underestimation of the Company and its future prospects.” “Therefore, the Board of Currys unanimously rejected the Second Elliott Proposal on 26 February 2024,” the statement continued.
According to acquisition regulations in the United Kingdom, Elliott must submit a final offer by 16 March.
Prior to the initial disclosure of Elliott’s interest in the retailer on 17 February, the share price of Currys was approximately 47 pence.
Since then, it has increased and closed at 66.5p on Tuesday.
“Tasty bidding competition”
According to Danni Hewson, the director of financial analysis at AJ Bell, Elliott had unequivocally expressed its intentions regarding Currys.
She said it has put some skin in the game, but not nearly as much as the company’s board will require to see in order to engage with its suitor in an appropriate manner.
UK plc is still quite inexpensive, but this action may prompt China’s JD to reveal its position, which could spark a bidding war that ultimately brings the price to the level one would anticipate from a profitable company emerging from a downturn.
Currys maintains a positive outlook for the future, as the implementation of cost reduction strategies resulted in an augmentation of its projected annual profit. Analysts, meanwhile, concur that Currys’ market share and profitability have maintained a substantial discount on the company’s share price for quite some time, which has attracted investors.
Currys, similar to numerous retailers, stands to gain from an increase in consumer spending as the pace of price increases decelerates and household budgets experience less strain.
However, Amazon and other online retailers may pose a threat to the future expansion of the company.
Employing 28,000 people, Currys, one of the largest retailers of consumer electronics in Europe, distributes washing machines, computers, refrigerators, and other electronic products throughout the United Kingdom, Norway, Denmark, Finland, and Ireland. It operates approximately 300 stores with 15,000 employees in the United Kingdom.
Currys, in addition to its electronic product sales, has an expanding service provision division that encompasses product maintenance, repair, refurbishment, and recycling. According to Investec analysts, the Care & Repair division could be worth up to £667 million on its own, while the mobile division could be worth approximately £500 million.
Towards the end of last year, discussions commenced with China’s JD.com regarding a potential transaction, as the Chinese company considered options for international expansion in response to weakened demand in its domestic market.
In November of last year, Currys announced a £175 million agreement to sell its Greek operations conducted under the brand name Kotsovolos.
