‘This clearly shows the absurdity of UK stock market valuations’: Currys urged to accept offer that values it at over £1bn

Currys should accept a takeover offer that would value the company at more than £1bn, according to one of its shareholders.

JOHCM UK Equity Income Fund, which owns just over 4.4 per cent of the retailer, said it would consider an offer of between 80p to 100p per share to be acceptable.

Last month, Currys rejected a £700m takeover from activist investor Elliott Investment Management.

That was followed a few days later by a second bid from the firm worth around £750m, which was also rejected.

READ MORE: Currys rejects £700m takeover bid from activist investor Elliott

READ MORE: Elliott tries and fails with second bid for Currys as takeover war continues

Currys rejected the first offer on the grounds that it undervalued the company. 

In a joint statement Clive Beagles and James Lowen, senior fund managers of the JOHCM UK Equity Income Fund, said: “For Currys, our current view based on known information is an acceptable offer would be in the range of 80-100p.

“This compares to an undisturbed share price of 47p, which would be close to a 100 per cent premium.

“At 90p, the market cap would be c.£1bn. Regular readers may recall our 2023 recommendation for the board to sell two divisions.

“One, the Greek business, was sold for £175m at the end of last year. We value the other, ID Mobile, at £350mn.

“Notably, before the bid, the market cap essentially only reflected the value of these two businesses.

“However, Curry’s core business, with leadership positions in both online and offline markets across the Nordics and the UK, generates approximately £9.5bn 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 Currys is 12p, suggesting an exit PE 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.

“As we await the outcome, we have placed a portfolio construction cap of 200bps on our position size, which meant we trimmed the position slightly.”

Currys has previously been said to be in talks with Chinese commerce giant JD.com about the possibility of a deal, however cautioned at the time there “can be no certainty that an offer could be made”.

In the last year, investors have watched Currys struggle to keep its head above water, as a slowdown in spending and national cash crunch battered both its earnings and share price.