11th Mar 2024 10:18
(Alliance News) - Currys PLC remains a possible bid target despite the decision on Monday by Elliott Advisors to withdraw its bid.
AJ Bell's Russ Mould noted Chinese group JD.com Inc has already expressed an interest in Currys and Elliott's recent approach may have put the electricals retailer on the radar of other possible suitors.
The decision "doesn't mean the target is no longer in play," he commented.
Earlier, Elliott Advisors UK said it does not intend to make a bid for the London-based consumer electronics retailer.
Shares in Currys fell 8.6% to 58.97 pence in London on Monday morning.
In February, Elliott Advisors, a US private equity firm, made an increased takeover proposal worth around GBP750 million or 67p per share. It had previously made a 62p per share bid.
But on Monday, Elliott Advisors changed tack after Currys spurned several approaches.
"Following multiple attempts to engage with Currys' board, all of which were rejected, it is not in an informed position to make an improved offer for Currys on the basis of the public information available to it," Elliott Advisors commented.
Currys had previously stated it felt the 67p offer "significantly undervalued the company and its future prospects," adding that the board unanimously rejected it.
Elliott already has a presence in the UK retail sector. It owns bookseller Waterstones. Under City rules, it can't make another bid for Currys for six months unless certain circumstances change.
These include if a third party makes a bid for Currys.
In February, JD.com Inc, the Chinese e-commerce company, said it was mulling an acquisition of Currys, but as of yet, no proposal has been disclosed.
AJ Bell's Mould said there is "logic" in wanting to own Currys, being the last "major UK-wide seller of electricals still with a physical store presence".
He pointed out the business has been through a "significant restructuring programme and is starting to see some rays of light in terms of the recovery story".
Mould felt Elliott's decision to walk away rather than a "hostile" offer suggests that its original approach was "highly opportunistic in the hope Currys could be bought on the cheap".
"Investors like Elliott typically want to pay as low a price as possible with the intention of potentially breaking up the group or driving big changes to realise hidden value in the business," he explained.
He noted reports based on conversations with big shareholders and analysts suggest 75 pence per share is a more "realistic takeout price, effectively giving any other interested parties a starting point for negotiations if they want to throw their hat into the ring".
Mould pointed out that some of Currys' biggest shareholders have already gone public and said Elliott's offer significantly undervalues the group.
"It's no wonder that Currys' management didn't even want to give Elliott time for a coffee let alone open the books to let the suitor undertake due diligence," Mould commented.
By Jeremy Cutler, Alliance News reporter
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