Currys shares skyrocket as JD.com considers bid for struggling retailer

Currys shares soared on Monday morning after Chinese online retail giant JD.com confirmed it was mulling an approach for the electricals retailer.

JD.com said it was in the ‘very preliminary stages’ of considering a takeover offer for the company, which operates over 800 stores and employs around 28,000 people across eight countries.

The Chinese firm’s move for Currys raises speculation of a bidding war between the Beijing-based firm and private equity group Elliott Advisors.

Currys rejected a takeover bid worth approximately £700million from Elliott Advisers last week, saying the 62p-per-share offer ‘significantly undervalued the company and its future prospects.’

Currys shares skyrocketed by 34.7 per cent to 63.4p, making them the biggest riser by far on London’s FTSE 250 Index.

Founded in 2004, JD.com is one of China’s two main e-commerce retailers alongside AliBaba-owned TMall and reported nearly $150billion in revenue last year. 

Bidding rival Elliott’s proposal would have represented a premium of about 30 per cent on Currys’ closing share price on Friday.

Sky News reported on Sunday that one prominent Currys shareholder was pushing the business to accept a minimum £800million price tag.

Waterstones owner Elliott is known for taking large stakes in struggling firms and pushing aggressively for change to try and bolster returns and share prices.

Last month, Currys revealed its like-for-like revenue fell by 3 per cent in the ten weeks ending 6 January following sluggish trade across all markets.

In the last couple of years, the firm’s sales have been badly impacted by cost-of-living pressures and the end of Covid-related restrictions hitting demand for goods like televisions and computers. 

Trading has been especially weak in the Nordic region because of Currys holding prices steady whilst rivals heavily discount products to clear themselves of excess stock.

Amid a challenging consumer spending outlook, the company cancelled its final dividend last summer to protect its balance sheet.

Since then, Currys has agreed to sell its Greek and Cypriot business, Kotsovolos, for €200million (£175million) to Public Power Corporation, Greece’s largest power generation supplier.

The firm intends to use proceeds from the sale on reducing debts but also believes the disposal would create ‘greater flexibility’ for future investment and shareholder returns.

Russ Mould, investment director at AJ Bell, said: ‘Currys is the last big UK electricals chain with a physical store estate, which makes it a unique asset on the domestic stock market. In theory, that status deserves a premium takeout price. 

‘However, in this case, its unique status is down to it being the last man standing in an industry which has migrated online. Retaining this status requires a lot of hard work rather than Currys having a major advantage over its peers.’