China’s shows interest in buying UK retailer Currys confirmed on Monday that it's thinking about making a cash offer for Currys.

China’s shows interest in buying UK retailer Currys
An exterior view of a Currys store in London, Britain, November 19, 2021. Picture taken November 19, 2021. REUTERS/May James/File Photo/File Photo

The backstory: Currys is a household name in the British electronics retail scene. But in the last several years, it hit a rough patch. The company's value plummeted by nearly 60%, mainly due to people tightening their budgets because of a cost of living crisis. So, to weather the storm, Currys, then called Dixons Carphone, took measures like shutting down struggling Carphone Warehouse stores, stopping dividends to shareholders, cutting down on pensions and even selling its stores in Greece and Cyprus to tackle its debts.

On the other side of the world,, a heavyweight in China's online shopping arena, is facing its own set of challenges. The company has been duking it out with bigwigs like Alibaba's Tmall and newer players like PDD Holdings. To stay ahead of the game, is eyeing international expansion, just like many other Chinese tech giants. In a recent letter to its employees, the company hinted at ramping up its logistics in “major countries” over the next few years to maintain its competitive edge.

More recently: Despite Currys' recent struggles, the company reported strong Christmas sales last month, signaling a potential turnaround. So, it’s attracted attention from buyers, like Elliott Investment Management, who are interested in getting in on the company’s comeback at a bargain price. But just this past weekend, Currys gave Elliott's bid of 62 pence per share, totaling £700 million (US$883 million), the cold shoulder, saying that it undervalued the company. 

The development: confirmed on Monday that it's thinking about making a cash offer for Currys. This caused a stir in the market, with Currys' shares shooting up by over 30% at one point. But made it clear it's still mulling over the idea and hasn't committed to anything yet. According to UK takeover rules, has until March 18 to make its move, while Elliott's deadline is March 16. But there might be some political concerns with such a major UK retailer being bought out by a Chinese company. So, the fact that the stock shot up after the offer suggests that investors think more offers to buy out Currys might be on the horizon.

Key comments:

“Currys could experience powerful profit tailwinds” as it shifts to selling more services rather than electronics gadgets, analyst Ben Hunt at Investec Securities said in a note prior to the interest being revealed.

“We will persistently set up international shopping platform channels to provide more low-priced, quality products for consumers and boost our supply chain capabilities overseas,” said in the letter to employees. 

"This move is fresh evidence that UK assets are considered to offer significant value, still partly weighed down by the impact of Brexit, the weaker pound, and the stagnating UK economy," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.