In a potential bid battle between the U.S. and China, Currys, a struggling U.K. electrical goods retailer, finds itself at the center of attention. Shares in Currys surged by 37% after Chinese e-commerce giant JD.com revealed its consideration of making an offer for the company. This move comes after U.S. hedge fund Elliott Investment Management expressed its interest in Currys, offering a cash deal that valued the retailer at £700 million ($883 million).
Elliott Investment Management, known for its activist approach, has until March 16 to present a firm offer or withdraw. Their 62 pence cash offer represents a 32% premium to Currys’ closing share price on Friday. However, the retailer’s board unanimously rejected the proposal, citing its undervaluation of the company and its future prospects. Following JD.com’s announcement, Currys’ stock rose to 65p, surpassing Elliott’s proposed offer.
Currys, which sells a range of electrical items in the U.K., Ireland, and Scandinavia, has faced several challenges in recent years. The cost of living squeeze experienced by its customers, competition from online-only retailers, and a decline in investor interest in mid-size U.K. stocks have all contributed to the company’s struggles.
Despite these difficulties, Currys remains a unique asset on the domestic stock market as the last major U.K. electricals chain with physical stores. This status is expected to command a premium takeout price. Analysts suggest that any suitor looking to acquire Currys would need to offer at least 71.1p per share to match the average premium seen on U.K.-listed takeovers in 2023.
The potential bid battle for Currys is seen as an indication that foreign investors still consider U.K. assets to offer significant value despite the impact of Brexit, a weaker pound, and a stagnating U.K. economy. Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, believes that foreign investors see bargains in Britain and are willing to invest in undervalued assets.
As the deadline for Elliott Investment Management to make a firm offer approaches, the future of Currys remains uncertain. What is clear, however, is that the British high street may become the battleground for a showdown between the U.S. and China in the race to acquire this struggling U.K. retailer.
