UK Retailer Currys Stocks Surge 36% after JD.com Mulls Joining in Bidding War

BEIJING, February 19 (TMTPost)-- London-listed shares of Currys PLC surged as much as 40.6% on Monday after Chinese e-commerce giant JD.com is probably joining in a bidding war with private equity investor Elliott for taking the British electrical retailer. Currys shares closed 36.4% higher to 64.20 pence, the highest since March 16, 2023.

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JD confirmed that it is in the very preliminary stage of evaluating a possible transaction that may include a cash offer for the entire issued share capital of Currys, JD said in statement filed with the London Stock Exchange on Monday. The statement didn’t reveal the possible offering range that JD considered. It noted it is uncertain that any offer will be made for Currys, nor the terms on which any offer might be made. JD is required to either announce a firm intention to make an offer for Currys by no later than 5:00 p.m. on March 18, 2024 in accordance with Rule 2.7 of the Code, or announced that it doesn’t intend to make an offer, in which case the announcement will be treated as a statement of which Rule 2.8 of the Code applies. The deadline of March 18 can be extended with the consent of the takeover panel in accordance with Rule 2.6 (c) of the Code, according to the statement.

The statement marked Currys became a potential target of JD right after the retailer rejected a proposal from U.S. investment management firm Elliott Advisors. Currys said on Saturday that its board of directors rejected an offer on February 16. "The Board of Currys considered the Proposal, together with its financial advisers, and concluded that it significantly undervalued the Company and its future prospects," a statement of the board said. Elliott was reported to table an unsolicited £700 million bid for Currys at 62 pence per share, a 31.7% premium to its share price last Friday. Currys was valued at £533m at the close of trading on the London stock market on Friday.

Currys, founded in 1884, operates through online and 823 stores in eight countries and has 28,000 employees. In the U.K. and Ireland, the retailer trades as Currys; in the Nordics under the Elkjøp brand and as Kotsovolos in Greece. The company has struggled in the past two years due to elevated inflation hitting demand across all of its markets. It cancelled its dividend and slashing spending in its Scandinavian operations last July. It sold its Greek business in November and said it would use the proceeds of about £156 million to cut debt and reducce its pension fund’s deficit. Last month, it released a forecast of a full year 2023/24 adjusted profit before tax of £105 million to 114 million ($133-146 million), down from = £119 million in the previous year, still ahead of the analyst’s estimated £104 million.

The possible bidding is a latest sigh that JD is ramping up operations in the Europe. Last April, JD spent £250 million (RMB2.143 billion) to acquire a large logistics asset portfolio in the UK from Goldman Sachs. The portfolio includes a large distribution center in Prospero Ansty Park, Coventry, England with an area of 1.1 million square feet, or about 102,000 square meters, and a logistics warehouse in Preston, England.Last October, Ochama, JD's one-year-old European omnichannel retail business, announced that it will add home delivery services to 19 additional countries. With its automated central warehouse and supply chain capabilities, Ochama now has replicated the omnichannel shopping model overseas and has already achieved home delivery services in 24 European countries.

Some analysts believe that Currys can make up for JD.com’s offline market to a certain extent. 3C--Computer, Communication and Consumer electronics is a dominant category on JD’s platform and it has rich experience and advantages in online operation of 3C products. Currys can effectively complement JD’s categories in European and other overseas markets and enrich JD’s advantaged categories.