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Currys’ largest shareholder has backed the board’s decision to reject a takeover bid from US investment group Elliott Management.
Asset manager Redwheel, which owns a 14.6 per cent stake in the UK electronics retailer, said on Tuesday they were “in complete agreement” that the business was worth substantially more than the 62 pence a share Elliott offered.
The proposal valued the company at about £700mn, prompting Currys’ board to say over the weekend that it significantly undervalued the company.
“We therefore support their decision to reject the offer,” added Redwheel in a statement.
The remarks come after Monday’s announcement from Chinese ecommerce company JD.com that it was also considering an offer for Currys.
Redwheel went on to highlight the perils of lowly rated British equities compared with their US counterparts.
“Unless this changes, it seems likely that we will continue to see overseas corporate buyers step in to take advantage of the depressed valuations of UK equities with ownership falling into foreign hands and the number of quoted UK businesses will continue to decline,” said Ian Lance, co-head of the UK value and income team at Redwheel.
Analysts at Peel Hunt previously said that they would “struggle to see the [Currys] board engaging on anything less than 80 pence”.
Until the interest from Elliott and JD.com, Currys’ shares had languished on the public markets, falling more than 80 per cent from a recent high of 500p hit in late 2015. The retailer’s shares were trading at 65p on Tuesday, valuing the group at over £736mn.
Currys chief executive Alex Baldock has been trying to revive the fortunes of the chain that was formed through the 2014 merger of mobile phone retailer Carphone Warehouse and Dixons Retail.
In July last year, the company said its Nordics business had “a really weak year” that overshadowed a “strengthening performance” in the UK, scrapping its final dividend as it recorded an annual pre-tax loss of £450mn.
Frasers Group, the UK retailer founded by Mike Ashley, is another large shareholder that owns about 11 per cent of Currys. It did not immediately respond to a request for comment.
