- Written by Nick Edser
- BBC News business reporter
image source, shutter stock
Currys could be at the center of a takeover battle after Chinese e-commerce group JD.com announced it was considering a takeover bid for the company.
The potential takeover comes after Currys announced at the weekend that it had rejected a £700m takeover offer from US investment firm Elliott.
JD.com said it was in the “very preliminary stages” of evaluating a potential bid for the retailer.
Currys shares rose more than 30% to 63p each on Monday.
The retailer has more than 800 stores worldwide and employs 28,000 people. It operates around 300 stores in the UK and employs 15,000 staff.
Currys said on Saturday it had rejected a takeover offer from Elliott for 62p a share, saying it “materially undervalued” the company, which would have valued it at around £700m. Ta.
However, reports suggest Elliott, which bought British bookstore chain Waterstones in 2018, could come back with a higher offer.
Currys' shares have fallen by more than a third over the past year and closed at 47.08p on Friday, before news of the takeover interest broke, valuing the company at around £534m.
Following reports that the company could be a potential bidder for Currys, JD.com is “in the very preliminary stages of evaluating a deal that could include a cash offer” for the UK retailer. issued a statement.
JD.com added: “We cannot be certain whether any offer will ultimately be made for Currys or the terms on which any offer may be made.”
Under UK takeover rules, JD.com currently has until March 18 to make a formal takeover offer or exit the deal. Elliott's deadline is March 16th.
Rising costs of living have hit many retailers as consumers rein in spending, with Currys last month saying underlying sales fell 3% during the key Christmas shopping period.
Nevertheless, the company raised its profit forecast for this year due to cost reductions and improved margins on some services.
As well as Currys stores in the UK and Ireland, Nordic operations in Sweden, Norway, Denmark and Finland also trade under the Elkjøp brand.
In November, the company announced a deal to sell its Greek business, which trades under the Kotsovolos brand, for £175m.
In addition to selling electronic products in stores and online, the services that Curry's provides are becoming increasingly important.
Revenues from our Care & Repair business, which provides protection, repair, restoration and recycling services, are increasing. The company's virtual mobile network iD Mobile recorded a 30% increase in the number of subscribers over the past year to he 1.6 million.
Last week, Investec analysts said the Care & Repair business alone could be worth £667m, while the mobile business could be worth around £500m.
Ben Hunt, equity retail analyst at Investec, said the interest in Currys comes as price increases are easing and real incomes are improving at the moment, and for many struggling retailers, “the news can't get any worse.” “However, this reflects the fact that stock prices remain depressed.” Levels are low within the sector and do not reflect the potential for recovery.
That makes companies like Curry's “easy steals” for private equity firms looking to buy undervalued companies, he said.
What's more, Currys is already “doing a lot of the heavy lifting” for potential suitors, cutting annual costs by £300m.
Many commentators say British companies are undervalued, with Eric Hirsch, co-chief executive of US private equity firm Hamilton Lane, telling the BBC's Today programme: Ta.
“The private market is always looking for value… and today the UK certainly delivers that in places.”
