This column signed off last week by bemoaning telecoms testing specialist  Spirent Communication’s (SPT) surrender to a £1 billion from US rival Viavi.

As we observed, the 61% premium was not anywhere near as generous as it looked when you consider the takeout price of 172.5p was 100p less than the shares were trading for in early 2023.

In the same spirit it is only right to welcome Currys’ (CURY) refusal to give in to what looked like a pair of opportunistic bids from private equity firm Elliott Advisors.

Elliott had initially proposed an offer that valued the electricals chain at £700 million (62p), and then raised it to £757 million (67p), but after Currys rebuffed it for a second time it decided to walk away.

While these bids were pitched at a premium, they were a long way below the levels Currys traded at just a couple of years ago.

There may still be interest from Chinese e-commerce firm JD.com, which revealed it was mulling a bid in February, and the managers of Currys’ holder JOHCM UK Equity Income Fund (B8FCHK5) James Lowen and Clive Beagles observed recently: ‘For Curry’s, 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% premium. At 90p, the market cap would be around £1 billion.’

Investors can read an in-depth interview with Currys in our bumper Christmas issue. Management will be under extra pressure to deliver if the company is not taken over but there are reasons to believe any disappointment over the collapse of the deal in the short term may be eased in the long term if Currys can deliver on its strategy.

True, the firm has been hit by a slowdown coming out of the pandemic as spending on electronic goods was pulled forward before easing off, and it has made a bit of a mess of things in the Nordics, which had historically been a dependable contributor to group earnings.

However, Currys is the only big specialist electronics retailer in the UK with a significant footprint of physical stores. You can see a role for the broad-based support Currys can provide to shoppers who might feel out of their depth making decisions on domestic tech.

In our view it would be welcome if UK management teams steeled themselves to ward off interest brought about by the cheap valuations afforded their shares, both in the long-term interests of their own shareholders and the market as a whole.

‹ Previous2024-03-14Next ›