Currys has officially declined a £700 million acquisition offer from Elliott Advisors, stating that it greatly undervalues the company. Elliott, based in the US, proposed 62p per share, a 32% premium over the current share price of the electronics retailer, which closed at 47.08p last week.
Currys, a retailer listed on the London Stock Exchange, encompasses brands like Dixons, PC World, and Carphone Warehouse. It operates 300 stores in the UK, employs over 15,000 people, and has a presence in eight countries.
The company’s board acknowledged receiving an “unsolicited, preliminary, and conditional proposal” from Elliott on Saturday. However, after a review with financial advisors, the board announced that the offer substantially undervalued Currys and its future potential, leading to a unanimous rejection of Elliott’s proposal.
The board also stated that there is no assurance of any bid being made for Currys and the terms of any potential offer remain unknown.
According to the City Code on Takeovers and Mergers, Elliott has until 5 pm on March 16 to either declare a definitive intention to bid for Currys or state that it will not make an offer.
Should Elliott’s bid succeed, it would mark another significant investment by the hedge fund in the UK retail sector.
Residing in the FTSE-250, Currys has experienced a gradual decline in its share price over the last three years, confronting similar economic challenges as other retail companies.
Recently, the company reported a decrease in sales during the Christmas season. However, Currys has indicated an improvement in its profit forecast, attributing this to a range of cost-reduction strategies it has implemented.
Alex Baldock, the group’s chief executive, mentioned in his statement that there has been promising progress in the UK and Ireland markets. He also noted an increase in service sales, which have contributed to higher profit margins.
Founded by Paul Singer in 1977, Elliott is known for its active investment approach and has made a significant impact in UK corporate circles. In 2018, Elliott acquired a stake in Hammerson, a shopping centre owner, and later escalated its share to pressure the board into accelerating asset disposals and management changes. This led to a major overhaul of Hammerson’s board.
That same year, Elliott became the principal shareholder in Whitbread, the owner of Premier Inn, and advocated for the spin-off of Costa Coffee. Whitbread eventually sold Costa Coffee to Coca-Cola a year later.
Elliott also invested heavily in GlaxoSmithKline, a major pharmaceutical company, in 2021. The firm reportedly pushed for its CEO, Dame Emma Walmsley, to reapply for her position after a period of underwhelming performance.
Sky News was the first to report Elliott’s interest in acquiring Currys on Saturday.
