China’s JD.com said it was evaluating a takeover of Britain’s Currys, sending shares in the electricals retailer soaring, and laying the ground for a bidding war after the group rejected a rival 700 million pound ($883 million) deal.
Chinese e-commerce group JD.com Inc confirmed on Monday that it was looking at Currys, after a report in The Times newspaper said that another bidder, U.S.-based investor Elliot Advisors, was considering a higher offer.
Currys confirmed to the stock market on Monday that it had rejected Elliot’s possible cash offer of 62 pence per share, saying that it believed it significantly undervalued the company.
Shares in Currys, which sells fridges, washing machines, computers and other electricals, jumped as much as 37% at Monday’s market open, the first time they have traded since the news of Elliot’s bid emerged, and were last up 33% at 62.3 pence.
Britain’s Telegraph newspaper, citing sources, reported on Sunday that JD.com representatives had made contact with Currys and held exploratory talks in recent weeks.
JD.com said in its statement that “it is in the very preliminary stages of evaluating a possible transaction that may include a cash offer for the entire issued share capital of Currys”.
Currys, which formerly operated the Dixons and Carphone Warehouse brands in Britain before focusing on the Currys name, has struggled to grow profits in recent years as consumer incomes have been squeezed by high inflation.
Shares in the company, whose main business is in the UK and Ireland and which also has a presence in the Nordics and employs 28,000 people, had lost 54% of their value in the last two years.
Currys said last year it was selling its Greek unit for 156 million pounds.
A takeover of the company would be a boost for Mike Ashley’s Frasers Group, which has amassed a more than 11% stake in Currys, partly through financial instruments.
Currys declined to comment on JD.Com’s statement, while Elliott Advisors, which already owns another British retailer in Waterstones bookshops, did not immediately respond to a request for comment.
Under UK takeover rules, Elliot has until 1700 GMT on March 16 to make a firm offer for Currys or announce it is walking away.
Reuters