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Currys’ largest shareholder, Redwheel, has warned that more foreign firms will begin to circle London companies after the electronics retailer rejected a takeover bid from US hedge fund Elliott, The Telegraph has reported.
Redwheel, which holds 14.6% of shares in Currys, said it was in “complete agreement” with the retailer’s board over their decision to reject Elliott’s offer, maintaining that Currys was “worth substantially more” than the US firm’s 62p per share bid.
According to the shareholder, the Currys approach highlighted a “wider problem with the UK equity market”, as it said pockets of the UK stock market were valued “significantly below” their worth because investors were shifting focus away to the US, despite potentially being able to get better return in London.
Ian Lance, co-head of the UK value and income team at Redwheel, said: “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. We believe that a healthy equity market is beneficial to the functioning of the economy.”
Lance’s comment comes amid growing concern over the health of the UK stock market, where valuations have taken a hit in recent years.
Analysts at Peel Hunt have suggested that Currys could be the first in a series of retailers to face takeover interest in the coming months, with others including Halfords and DFS.
In January, Currys chief executive, Alex Baldock, said the government could do more to bolster retailers, claiming Jeremy Hunt’s policies on business rates and recycling were piling pressure on many stores.
