The latest confrontation between the United States and China may take place on the British high street.
Shares in London-listed Currys CURY,
Shares of Chinese e-commerce giant JD.com rose 37% on Monday after Chinese e-commerce giant JD.com said it was considering a bid for the struggling U.K. electrical goods retailer.
The announcement raises the possibility of a bidding battle with Elliott Investment Management after the US hedge fund and private equity group said over the weekend it was considering a 62p all-cash bid for Currys, valuing the company at around £700 million (US$883 million). ). .
Elliott, known for her activist approach and who at the end of last year had assets worth $65.5 billion, said there was no certainty that she would make a bid for Carey. Under UK takeover regulations, it has until March 16 to make a firm offer or withdraw.
The offer from Elliott, which owns UK bookstore Waterstones, was at a premium of around 32% to Currys' closing share price on Friday. However, it was unanimously rejected by the retailer's board because it “significantly understated the value of the company and its future prospects,” the company said in a statement issued on Saturday.
Carey shares on Monday rose above Elliott's proposal to 65 pence after JD.com JD,
At the start of the week it said it was “in the very preliminary stages of evaluating a potential deal which may include a cash offer for the entire issued share capital of Currys”.
The share price of Currys, which sells electrical appliances such as washing machines, computers and fridges in Britain, Ireland and across Scandinavia, was trading at around 500p in 2016, but fell as its customers faced huge pressure on the cost of living, online. Only rivals were cutting into its margins, and investors were dissatisfied with mid-cap British stocks.
With 815 stores, a large proportion of which are in Britain, the retailer is the last large UK electrical chain to have a physical store, making it a unique asset in the local stock market, according to analysts.
“In theory, this case deserves a premium price for take-out. However, in this case, its unique status is due to it being the last man standing in an industry that has moved online,” said Ross Mold, investment director at AJ Bell.
“The applicant would have to offer at least 71.1 pence per share to match the average premium of 51% seen in UK-listed takeovers in 2023,” Mold added.
Susannah Streeter, head of finance and markets at Hargreaves Lansdowne, said the supposed bidding battle for Carey was a sign that foreign investors were seeing deals in Britain.
“This move is further evidence that UK assets are considered highly valuable, and remain partly affected by the impact of Brexit, the weakness of sterling and the stagnation of the UK economy,” Streeter said.
