Chinese ecommerce company JD.com has said it is in the early stages of considering an offer for Currys, setting up an unlikely bidding war for a UK electronics retailer long unloved by investors.
JD.com’s interest comes just days after Currys rejected an unsolicited bid from US investment group Elliott Management, saying it significantly undervalued the company.
Elliott’s proposal was pitched at 62p (72 cents) a share – a roughly 32 per cent premium to its closing price on Friday. Currys’ shares surged 36 per cent to 64p in early trading on Monday, valuing the group at just over £700 million (€818 million). Currys trades in the Republic under the Currys PC World brand.
Currys chief executive Alex Baldock, who joined in 2018, has been spearheading a turnaround of the chain, which sells televisions, laptops and other electrical goods online and through 815 stores in eight countries.
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Analysts at Investec said they were not surprised that the retailer had attracted interest given the depressed share price. They estimated that the retailer’s electronics refurbishment division and its mobile businesses could be worth more than £1 billion (€1.17 billion).
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During the pandemic, Currys closed all 531 Carphone Warehouse stores it owned in the UK and Ireland, with the loss of 2,900 jobs, in an effort to make its struggling mobile phone business profitable. The electronics retailer has a strong market position in the UK and the Nordic region. In November it agreed to sell its Greek business in a £175 million (€204 million) deal that is expected to strengthen its balance sheet.
A bid from JD.com would mark a strategic shift from the Chinese retailer, which was founded in 2004 and is now facing a slowdown in its domestic market. The company was linked with a bid for the German electronics chains MediaMarkt and Saturn in November.
In a statement on Monday, JD.com said: “There can be no certainty that any offer will ultimately be made for Currys, nor as to the terms on which any offer might be made.” The company’s interest was first reported by the Daily Telegraph.
Elliott, which manages about $65 billion (€60 billion) in assets and invests in public and private markets, already has some exposure to the UK high street through its ownership of bookseller Waterstones.
The hedge fund and private equity group is known for taking an activist approach to investing, engaging in boardroom battles to influence the future direction of the companies in which it has a stake.
Frasers Group, the UK retailer founded by Mike Ashley, owns about 11 per cent of Currys. – Copyright The Financial Times Limited 2024
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