You won't get it cheaper...
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
Currys is at the centre of a takeover battle. The electricals retailer said in a stock market statement this morning that it has rejected a £700 million bid from Elliott, the US hedge fund. Less than an hour later, JD.com, the Chinese retailer, said it is also interested in buying Currys.
Shares in Currys, whose advert features in the image above, have risen more than 35 per cent today on the news of the takeover interest. However, as you can see from the graph below, the share price is still well below the highs it hit in early 2021…
Currys’ share price has been under pressure due to a disappointing performance in its Nordic business and the weak consumer market in the UK. Last month the retailer reported that like-for-like sales in the UK and Ireland were down by 3 per cent in the run-up to Christmas. Sales in its international business, which includes the Nordics and Greece, were down 5 per cent.
Currys has more than 800 shops and 28,000 staff across eight countries, including roughly 300 shops and 15,000 people in the UK. It was founded in 1884 - the same year as Marks & Spencer - but initially built bicycles before diversifying in the 1920s.
The company also owns Dixons, PC World and Carphone Warehouse. Carphone was initially set-up in 1989 by Charles Dunstone and Julian Brownlie. It came together with the other brands in 2014 when it merged with Dixons, as the company was then known. That deal valued the combined business at £3.8 billion, which highlights the upheaval it has faced since then.
Elliott is known as an aggressive US hedge fund. However, it has had success in the retail industry with Waterstones and Barnes & Noble, the book chains. Waterstones and Barnes & Noble have been revitalised under the leadership of James Daunt. You can listen to our fascinating podcast episode with Daunt from last year here
The offer from Elliott was priced at 62p per share, roughly a third higher than Currys’ share price at the end of last week…
This is what Currys said about Elliott’s approach:
The board of Currys considered the proposal, together with its financial advisers, and concluded that it significantly undervalued the company and its future prospects. Accordingly on 16 February 2024, the board of Currys unanimously rejected the proposal.
JD.com was founded in 1998 and is one of a collection of fast-growing Chinese retailers with international ambitions, like Alibaba and Shein. The company initially sold electronics products such as CD-ROMs through a shop in Beijing. However, it started to sell products through the internet in 2003 when the SARS outbreak hit China. You can read more about the history of the company and founder Richard Liu here. JD.com is valued at about £30 billion and is listed on the Hang Seng Index in Hong Kong.
This is what JD.com said in its statement:
In response to the recent press speculation regarding Currys, JD.com confirms that it is in the very preliminary stages of evaluating a possible transaction that may include a cash offer for the entire issued share capital of Currys.
There can be no certainty that any offer will ultimately be made for Currys, nor as to the terms on which any offer might be made. A further announcement will be made if and when appropriate.
JD.com has until March 18 to make an offer, while Elliott has until March 16 under UK takeover rules.
Currys shareholders include Mike Ashley’s Frasers Group, which owns 11 per cent. Sky News has reported that shareholders in Currys are looking for at least £800 million. You can read that report here
Other stories that matter…
1. A quarter of pubs, restaurants and hotels in the UK have exhausted their cash reserves and are at risk of collapsing if there is another downturn in trading, according to a survey conducted for UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster. You can read more in a story by The Times here
2. Insurance groups in the UK want to set-up public-private partnerships to invest £100 billion into infrastructure projects. Story by the Financial Times here
3. Kemi Badenoch, the business secretary, is involved in a row with Henry Staunton, the former chairman of the Post Office and WH Smith. Staunton says he was told that “someone's got to take the rap" when he was forced out of the Post Office job in January after joining in December 2022. However, Badenoch has said that is a “disgraceful misrepresentation" of their conversation. More from the BBC here
4. A deep dive on data from The Sunday Times on why pay in the US is now well ahead of the UK. A police constable outside London in the UK can earn around £50,000, but in the US it is more like £80,000. There are also big pay gaps in property, IT and sales. You can look into the data here
5. There was a fascinating interview in The Observer with professional gambler Haralabos Voulgaris about how he is trying to revolutionise third-tier Spanish football club Castellón. “You can’t be a winning delusional gambler. I grew up in a violent home and used to think less of anyone who couldn’t control their emotion,” he says of his data-focused approach. “I’m about as unemotional as it gets but I was still subjective until I got into data. You need five years to build your model: three to accumulate the data, two to test it. If it’s predictive, you probably have something.” You can read the piece in full here
And finally…
I enjoyed BBC Radio 4’s profile of James Timpson on Saturday night. The profile looks into Timpson’s new book - The Happy Index: Lessons in Upside-Down Management - and the retailer’s success in hiring ex-offenders, who now make up 10 per cent of the workforce. You can listen to the profile here
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Best
Graham