Currys is the last survivor of Britain’s hollowed-out electrical and electronics retail sector.
In an industry where there is intense competition from online rivals Amazon and AO World, innovation requires management to be fleet of foot.
Under the current leadership of Alex Baldock, the group has demonstrated willingness to make tough decision such as axing Carphone Warehouse legacy stores.
Moreover, Currys has overhauled warranties on goods. They are no longer sold as an add-on but part of a thriving ‘Care and Repair’ business valued by brokers Investec at £66million alone.
That places the initial £700million offer from Elliott Advisors in perspective. The colour of Chinese suitor JD.com’s money has yet to be seen.
Undervalued: Electrical and electronics retail chain Currys has become the latest UK company to be targeted by private equity predators
No one in Britain should be in raptures about Beijing’s ensign draped across a home grown stores empire.
Stakeholders in Currys, including retail parks up and down the land, need to be fully aware of what a public to private or overseas takeover could mean.
Private equity ownership has been a disaster for Britain’s shopkeepers and high streets.
The defenestration of Debenhams left gaping holes in the country’s town centres. The abuse of The Body Shop by successive owners left it in administration.
In the electronics sector, Currys’ main rival Comet collapsed in the hands of private equity in 2012.
Phones4U imploded under the ownership of private equity barons BC Partners amid acrimony in 2014.
Founder John Caudwell alleged ‘ruthless’ proprietors destroyed the company. HMV all but died in 2018 after a period in private equity ownership and only recently made a reappearance.
The Kalms family, which founded Dixons in 1937 as a photographic studio in Southend and later merged with Currys – founded in the 19th Century – would be distraught to see their legacy suffer a similar fate to other public to private victims.
Should Currys succumb to predators, it is unlikely to survive in its present form as a British and Nordic enterprise. The temptation to flog the Scandinavian arm, hollow out Britain and Ireland, sell the parts and slough off pension fund liabilities will be huge.
So far the Currys board is refusing to sell on the cheap. But if the bidding war hots up, it will find it hard to hold-out against shareholders interested in making easy money.
The biggest holder Redwheel, with 15 per cent of the stock, lacks a long-term record in retail. Mike Ashley, who controls 6 per cent of the shares and a further 5 per cent in options, also will have a big say.
Currys is an undervalued asset and a plaything for unsafe owners wanting to make a killing.
Blame for this falls squarely on the shoulders of British pension funds who largely have withdrawn from the FTSE indexes owning at best 4.7 per cent of the market.
This is an act of vandalism which can be tracked back to the 1997 Labour government, the end of dividend tax privileges and overbearing regulation. The gates of Currys have been opened to barbarians.
Handy Andy
The loss of Andy Haldane as chief economist of the Bank of England has been an enormous error.
In 2021, he was ahead of the nodding dogs on the Bank of England’s interest rate setting committee in wanting to tighten policy and head off inflation.
In an interview with Bloomberg, he now says that if rate setters don’t start cutting soon chances are that the shallow recession seen in the last six months of 2023 could risk a far deeper slump.
He believes risks are on the downside unless the Bank loosens soon.
When and if Andrew Bailey retires (his tenure ends in 2028), there is a sound candidate in exile.
Lost cause
NatWest looks determined to eliminate personal service.
An entrepreneur of my acquaintance reports that his ‘Private Bank Manager’ has been replaced by an automated machine which offered three options, none of which were relevant.
Eventually he managed to speak to a NatWest colleague who declined to put him through to his personal banking manager.
Instead, the official offered to send a message concerning my friend’s request to make a ten-year rental deposit of £142,000 on behalf of a tenant.
Word eventually came back saying this facility was no longer available.
My friend’s advice: don’t buy the shares.
