05 March 2024 , 14:00
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Currys, the tech retailer, should hold out for a takeover offer of around £1 billion, according to one of its investors.
JOHCM (JO Hambro Capital Management) UK Equity Income fund, who is a top 10 shareholder in the company, said an offer between 80p and 100p per share would be "acceptable". This would value the business at about £1 billion.
This comes after Currys turned down a second, higher £757 million takeover bid from the US owner of Waterstones last week. Activist investor Elliott Advisors had made a second proposed offer worth 67p a share, up from its initial unsuccessful 62p a share approach on February 19.
However, this was also rejected, with the firm's board saying it "significantly undervalued the company and its future prospects". Elliott has until March 16 at 5pm to make a firm offer for Currys or walk away under City Takeover Panel rules.
Chinese retail giant JD.com also said last month that it was considering a possible deal to buy Currys. On Tuesday, JOHCM UK equity income fund said it believed the value of the deal compared to the size of the retailer's sales showed the current "absurdity" of the UK stock market.
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Clive Beagles and James Lowen, top fund managers at the fund, said: "Currys' core business, with leadership positions in both online and offline markets across the Nordics and the UK, generates approximately £9.5 billion in sales."
"This clearly shows the absurdity of UK stock-market valuations, which we have discussed extensively in these reports over the last two years. Our normalised earnings per share for Curry's is 12p, suggesting an exit per earnings of 8x at the top end of the range. Our range reflects some pragmatism, as we can rotate the value received into other very cheap stocks."
Shares in Currys went up by 0.6% to 66.45p.