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Currys is a hugely significant part of the UK retail landscape. It is arguably the last surviving major ‘brick and mortar’ shop you’ll find on your local high street which focuses solely on electronic goods – in an age where those products and services are increasingly purchased online.
Many customers do want to still visit these kinds of stores, however, in order to get expert advice from Currys employees (e.g. comparing the merits of different TVs, printers, etc) and avoiding lengthy (sometimes disappointing) delivery processes by picking up in-person.
While Currys has maintained a fairly steady business as a result of those selling points, it has also been in some difficulty recently following the ongoing impact of the cost-of-living crisis, which has seen consumers significantly reduce their spending on ‘non-essential’ goods.
While less disposable income at the end of the month will not affect the fact you still need milk or eggs (see the strong position of many UK supermarket chains), it certainly does make you feel that putting off that new 4K TV purchase might be wise. Last year, the company notably went back on its promise to release a dividend to shareholders amidst concerns about rising inflation.
As a result of these complex factors impacting Currys’ business (both positive and negative), there is room for some debate over how strong a position the retailer is in. It is from such a debatable position (where some could argue a company might be undervalued and the time might be right to launch a bid) that takeover offers often arise.
The main bidder so far has been US-based investment firm Elliott Advisers. An initial bid worth 62p per share (valuing the company as a whole at £700 million) was rejected some months ago by the board at Currys, and now a revised bid of 67p per share (valuing the company as a whole at around £750 million) has been rejected too. Shares prices dropped by almost 10% following the news, with individual shares now trading at around 58p. Currys have maintained that their business should be valued at a significantly higher rate – around the £1 billion mark, at least.
It is also worth outlining exactly what Elliott are known for in terms of their bidding activity. They already have a foothold on UK high streets through their majority ownership of Waterstones (which was bought in early 2018), and their portfolio has previously contained stakes in numerous other well-known businesses ranging from Samsung to AC Milan. They have been known in particular for investing in ‘distressed securities’ – e.g. profiting from businesses which have been struggling or nearing bankruptcy for some time.
Another key aspect of their portfolio is the ‘activist funds’ strategy. This is a process through which such investment firms will purchase significant, but not total, equity in a company, and then use their shareholding in order to put pressure on management, thus gaining control of the company from within.
There is another bidder in place, too – Chinese retail giant JD.com. They have been following the company’s business for some time, although no formal bid has arrived yet, and Elliott’s exit from the race reduces the pressure on JD in terms of entering a bidding war (something which retail investors in Currys were likely hoping for).
This story could be discussed in a number of contexts. As an aspiring solicitor applying for opportunities such as vacation schemes or training contracts (even open days, perhaps), this provides an excellent talking point. As an aspiring barrister applying for mini-pupillages or pupillages, this offers an interesting discussion topic.
It is also a story which could be highlighted as demonstrative of your interest in this area of law via your application form, but then also discussed in greater detail (perhaps alongside some kind of assessment centre case study task) at the interview stage.
Another point worth considering is which firms or chambers would be interested to hear you analysing this kind of story. You need to understand the business models of legal organisations here – a high street solicitor’s firm is not going to be advising Currys on these proposed deals, for example. In terms of chambers, you’d be targeting these discussions to some of the top-ranked commercial-focused chambers in the City.
Even more relevant would be the top law firms in the City (since the takeover process as it stands in this story is not contentious and would be unlikely to draw the need for a barrister). Relevant law firms could include those ranked in the top bands in the Chambers and Partners rankings for large corporate deals.
This encompasses the Magic Circle heavyweights (think Slaughter and May, Freshfields, etc) and elite US firms like Latham & Watkins or Skadden. All of these firms are known for advising on large takeover bids like this one.
In terms of the actual content of your discussion if you were to apply this story, there are a number of angles you could approach it from. One way of thinking about this is via different practice areas.
The most obvious practice areas involved here are corporate law – M&A, private equity, etc. These are the groups which would ultimately be leading a transaction like this, and you could go into a great deal of detail about the financial aspects of such a deal.
It is also worth noting that these financial elements are not only useful to discuss in the context of specific practice areas, but also show a general sense of commercial awareness from an applicant too (something which any large corporate law firm, for instance, will want all their trainees to develop thoroughly).
Another point of discussion could be the fact that this deal involves companies on both sides of the Atlantic. You would also need to discuss aspects of international law – how do these deals work in terms of legislation when we are going cross-jurisdiction? Large law firms make a large amount of their profits from such complex cross-border deals, and this will likely lead to collaborating with lawyers in other offices around the world (testing key skills like effective teamwork).
Employment law is another consideration here. If a bidder is successful, what rights do employees at Currys currently have (from shop-floor staff all the way up to the board)? To what extent could JD.com restructure the business if successful, and what limitations are currently in existence there? These are all key points worth considering.
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