Currys

The collapse of negotiations with Sainsbury’s over the sale of Argos marks the second unsuccessful attempt by JD.com to acquire a UK-based electrical retail business within the past 18 months.

According to The Telegraph, the Chinese e-commerce giant confirmed in February 2024 that it was in the early stages of considering a potential transaction, which might include a cash offer for Currys. Notably, at that time, Currys—ranked number one in the UK and Nordic markets—was trading at approximately half of its current stock price.

Sainsbury’s acquired Argos in 2016 for £1.1 billion. As Sainsbury’s shifts its focus more heavily toward food retail, Argos becomes a prime candidate for divestment. In our Sum-of-the-Parts (SOTP) valuation, Argos is valued at £1.4 billion.

With the current tensions between China and the US, Europe is increasingly looking like the preferred playground for Chinese companies as highlighted by the recent deal on Ceconomy. Yet we believe there is room for more consolidation in Europe. Currys with its solid positions in the UK and in the Nordics looks like an attractive asset very complementary to Ceconomy positions in Europe. And of course, Fnac-Darty (not covered) looks like a natural target for JD.com once the bid on Ceconomy is completed to take a leading market share in France.  

These may also be attractive targets for other Chinese retailers wishing to expand outside Asia.