Currys rejects second takeover offer from US firm Elliott

Currys has rejected a second takeover approach from US firm Elliott, saying the offer "significantly undervalued" the electronics chain.

Elliott valued the retailer at around £757m, up from its initial £700m valuation earlier this month.

Currys has more than 800 stores globally, but has seen slowing sales due to the cost-of-living crisis.

It said that over the Christmas period, which is usually busy for retailers, it saw a 3% drop in sales compared with the same period a year earlier.

Like many High Street businesses, Currys has been struggling with falling sales as customers cut back on spending.

Elliott has until 16 March to give a final offer, under UK takeover rules.

The US firm, which bought UK book shop chain Waterstones in 2018, has a reputation as an activist investor, meaning it pursues companies in order to take them over and change how they are run.

Elliott's latest offer valued Currys at 67p per share, an increase on its previous offer of around 62p per share.

In a statement on Tuesday, Currys confirmed it had received a second offer from Elliot.

"The Board of Currys considered the Second Elliott Proposal, together with its financial advisers, and concluded that it significantly undervalued the Company and its future prospects. Accordingly, on 26 February 2024, the Board of Currys unanimously rejected the Second Elliott Proposal," it said.

Before news of Elliot's interest in the retailer first emerged on 17 February, Currys' share price was trading at around 47 pence per share.

It has since jumped and closed on Tuesday at 66.5p.

Currys maintains that its future prospects remain bright, after cost-cutting measures led it to increase its forecast profit for the year. Analysts meanwhile acknowledge that Currys' share price has long been at a steep discount - given its market share and profitability - which has made the firm attractive to investors.

Like many retailers, Currys could also benefit from an uptick in consumer spending as price rises slow and there is less of a squeeze on household budgets.

However, competition from online retailers such as Amazon could put a dampener on the firm's future growth.

Currys, one of Europe's largest consumer electronics retailers, sells washing machines, computers, fridges and other electronics across the UK, Norway, Denmark, Finland and Ireland, and employs 28,000 people. In the UK, it operates about 300 stores with 15,000 staff.

As well as selling electronics, Currys has a growing business in offering services to maintain, repair, refurbish and recycle products it sells. Analysts at Investec said the Care & Repair business alone could be worth as much as £667m, while mobile business could be valued at about £500m.

The BBC understands that conversations with China's JD.com on a possible transaction started towards the end of last year, as the Chinese firm looked at options to expand internationally because of weaker demand in its home market.

Last November, Currys announced a deal to sell its Greek business, which trades under the Kotsovolos brand, for £175m.