Elliott pulls from Currys takeover talks

11th Mar 2024 07:03

(Sharecast News) - Shares in Currys slumped on Monday as US private equity firm Elliott Advisors pulled from the race to take over the UK electrical retailer after "multiple attempts" to discuss an offer were rebuffed.

Currys shares surged last month when it was revealed that Elliott had made an initial potential offer worth £700m, or 62p a share - later upped to £742m. Both were rejected "on the basis that it significantly undervalued the company and its future prospects".

Meanwhile Chinese e-commerce giant JD.com also entered the fray and has until March 18 to make a firm offer or walk away under UK takeover rules.

The retailer has been struggling in the last two years as high inflation hit demand across all of its markets. Last July Currys cancelled its dividend and cut spending in its Scandinavian operations.

"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 said on Monday.

"Elliott therefore confirms it does not intend to make an offer for Currys."

Currys, which employs more than 15,000 people in the UK and has about 300 stores became a group name after Currys, PC World and Carphone Warehouse merged in 2014.

Under UK takeover rules Elliott cannot make a revised offer for Currys for at least six months.

AJ Bell investment director Russ Mould said Elliott's decision "doesn't mean the target is no longer in play" with the JD.com approach still live and the electricals retailer could be on the radar of others.

"There is logic in wanting to own Currys. It is the last major UK-wide seller of electricals still with a physical store presence. There are still plenty of people who like to go into a shop to get advice or technical assistance, compare products in person, and be able to collect items without having to risk a courier losing or damaging their goods during transit," he said.

"Elliott says Currys' management refused to engage which at that point would normally see a bidder go hostile in their attempt to succeed with a takeover. Instead, it has just walked away which 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.

"Some of Currys' biggest shareholders have already gone public and said Elliott's 62p per share 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."

Reporting by Frank Prenesti for Sharecast.com