- March deadlines for formal bids
- Frasers' 10-per-cent holding could complicate buyout
Currys (CURY) shares soared by a third on Monday morning after the electronics retailer rejected an unsolicited takeover proposal from US activist investor Elliott Advisors. Chinese ecommerce giant JD.com (HK:9618) also said it was sniffing around the business.
Waterstones owner Elliott made a preliminary proposal of 62p per share for the entire company on Friday, which represented a 32 per cent premium to Currys’ closing share price that day. The Currys board turned this down, saying it “significantly undervalued” the business and its prospects.
Sky News reported that a “leading shareholder” wants Currys' board to stand firm until it is offered at least 75p a share. Elliott has until 16 March under the takeover code to confirm its intentions about a formal offer.
Meanwhile, JD.com confirmed this morning that it was "evaluating a possible transaction that may include a cash offer" for Currys. A takeover would diversify its revenue stream as it battles headwinds in its home market. It has a deadline of 18 March to make a move.
Another potential bidder is Frasers (FRAS), which owns more than 10 per cent of Currys' shares. But a takeover offer from Mike Ashley's business looks unlikely as things stand, argued Shore Capital, given that Frasers raised its stake in AO World (AO) and announced an £80mn share buyback programme last week.
Until Friday, Currys' share price had almost halved in the past 12 months. Trading has been hit by a lower demand for mobile phones and other electronics and greater competition in the Nordics. The shares are rated at just 6 times forward consensus earnings, according to FactSet.
In an update last month, Currys said its total like-for-like sales fell 3 per cent in the 10 weeks to 6 January, impacted by a weaker performance by TV and computing products. It guided for a full year adjusted profit before tax of £105mn-£115mn, ahead of consensus forecasts, a move driven by progress with gross margin and cost savings.
Currys expects to receive net proceeds of around £156mn from the sale of its Greek division Kotsovolos, a transaction guided to complete before its year-end in April. The funds will be used to cut net debt.
