On Monday morning (19.02.2024), the share price of the British electronics retailer Currys plc shot up. The cause of the price fireworks were takeover fantasies that had arisen around the international retail chain.

Several companies are said to be interested in a possible takeover of the London-based retailer. According to announcements from the London Stock Exchange (LSE) on Monday, two interested parties are competing for a possible takeover of Currys.

Investment company Elliott Advisors (UK) Limited has already made an unsolicited takeover offer to Currys, which was immediately rejected by Currys as insufficient. The second interested party is the Chinese online retail giant JD.com.

Before I explain further details about the takeover fantasies surrounding Currys, I would like to briefly introduce the companies involved.

The companies involved in a brief profile: Currys plc is a leading omnichannel retailer for technology products and services. Currys was formed in 2014 from a merger of the electronics retail chain Dixons Retail and the telecommunications retailer Carphone Warehouse Group.

The company is represented in the UK and Ireland under the Currys brand. In the Scandinavian countries, the company is known under the brands Elkjøp, Elgiganten, and Gigantti. In Greece and Cyprus, the electronics retailer operates under the Kotsovolos brand.

Currys employs 28,000 people who generated sales of £9.5 billion (approximately €11.1 billion) in the 2022/23 financial year. The operating profit (EBIT) in 2022/23 was -364 million GBP (approximately -404.7 million euros).

Elliott Advisors (UK) Limited is a subsidiary of the US investment company Elliott Investment Management L.P. The companies were founded by Paul Elliott Singer, who is still the president and co-CEO of the parent company today. The company is one of the oldest fund managers of its kind with continuous management. As of the end of 2023, Elliott managed assets of around $65.5 billion.

The company employs 570 people at its headquarters in West Palm Beach, Florida, and its affiliated branches, nearly half of whom work in portfolio management and analysis, trading, and research.

JD.com Inc., founded in 1998, is China’s leading e-commerce provider with 580 million active customers. In addition, the company operates as a logistics service provider with over 1,600 warehouses.

JD.com employs more than 450,000 people. In the 2022 financial year, the company generated sales of 1.04 trillion Renminbi Yuan (CNY – approximately €140 billion) and an EBIT of 15.9 billion CNY (approximately €2.08 billion).

The stock exchange announcements in detail: According to an announcement from the LSE, Elliott Advisors (UK) confirmed on 17.02.24 that it is considering a cash offer for Currys. However, there is no certainty that an official offer for Currys will be made or on what terms such an offer would be made.

In another LSE announcement on 19.02.24, the Currys board confirmed that it had received an unsolicited, preliminary, and conditional offer from Elliott. In this offer, Elliott offers Currys shareholders 62 pence per share in cash.

The board has reviewed the offer and concluded that it significantly undervalues the company and its future prospects. Accordingly, the board unanimously rejected the offer on 16.02.2024.

In a third stock exchange announcement, Chinese e-commerce provider JD.com confirmed that the company is in a very early stage of evaluating a possible transaction that could include a cash offer for the entire issued share capital of Currys.

However, there is no certainty that an offer for Currys will be made or what terms such an offer will include.

The stock market’s reaction: Although the stock exchange announcements still contained little concrete information, they gave the Currys share „wings“. During the day on Monday, the share price at the LSE jumped by more than 36% and closed at 64.20 British pence (GBp).

The way forward: Whether there will actually be an official takeover offer or even a bidding war for Currys remains to be seen. Under British law, however, the two interested parties must make a decision within 28 days of the publication of each stock exchange announcement.

By then, both companies must either announce a firm intention to make an offer for Currys or state that they do not intend to make an offer.