19th Feb 2024 10:08
(Alliance News) - Currys PLC shares jumped at the start of the week after the company attracted takeover interest from private equity, and Chinese technology firm JD.com Inc.
Currys shares surged 34% to 63.25 pence each in London on Monday morning.
JD.com, noting press coverage, said it is mulling an acquisition of Currys. The Telegraph newspaper on Sunday reported JD.com has held early talks with Currys. JD.com shares closed 4.1% lower at HKD91.85 each on Monday in Hong Kong.
JD.com noted that there is no certainty that its interest will result in a bid.
On Sunday, Currys said it rejected a takeover tilt from US private equity firm Elliott Investment Management LP.
Currys said it received an unsolicited proposal worth around GBP702.8 million from Elliott, or 62 pence per share. The Currys market value topped that figure on Monday.
Currys said the Elliott bid "significantly undervalued the company and its future prospects".
Elliott already has a presence in the UK retail sector. It owns bookseller Waterstones. According to City rules, it has until March 16 to announce if it plans to make an offer for Currys.
JD.com has a deadline of March 18, meanwhile.
If either are to seal a deal, they may need an offer worth GBP800 million. Sky News reported that a major Currys shareholder wants a 75p-a-share bid "at a minimum".
Shore Capital Markets analyst Bradley Hughes said a 75p bid would still be a "meaningful discount" to the Currys valuation against its peer group.
Fellow Shore analyst Clive Black said Frasers Group PLC, the owner of Sports Direct, could play kingmaker or even join the takeover battle itself. It is currently an investor in Currys, with roughly a 10% stake.
"One shareholder in Curry's who may be sitting a little happier over his cornflakes this morn, is Mike Ashley, the man behind Frasers' Group. Quite whether he wishes to become involved in a bidding war for Curry's remains to be seen, the firm also has notable positions in AO, Asos, Boohoo, and N Brown Group. Additionally, Frasers has just commenced a share buyback. Again, we shall watch with interest but what Ashely has perhaps done, is show the undervalued nature of much of the UK listed retail scene," Black added.
"So, now we wait. Is Elliott's interest in Curry's a one-off move that dissipates by the 16 March, or something that is, post ScS, going to represent another chapter in the shrinking of the composition of the London Stock Exchange list? Curry's shareholders will ultimately decide, and its Board needs to know when the bird is in the hand…"
AJ Bell analyst Russ Mould said it is likely Frasers will sit this one out.
"It is unlikely that Frasers would make a bid for the group. While it has expressed a desire to be a bigger player in electricals, it prefers to buy companies when they are on their knees, not after someone else has also pushed up the price with an offer. Frasers had its chance to bid for Currys last year when no one else was interested," Mould added.
By Eric Cunha, Alliance News news editor
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