Consolidation is sweeping through European consumer electronics retail, and Currys may be the one major player left on the sidelines.Analysts at RBC Capital Markets think there is room for more deal-making in the sector. They’ve kept their “outperform” rating on Currys with a 195p price target, roughly 32% above its 148p share price on 22 October.

Its two big rivals are already spoken for

• MediaMarkt and Saturn: their parent, Ceconomy, is being bought by China’s JD.com, with final EU approval expected on 4 November.
• Fnac Darty: it has agreed to a takeover by EP Group, the investment vehicle of Czech billionaire Daniel Kretinsky. The tender offer closes on 9 November.

That leaves Currys, which trades in the UK and the Nordics, as the only one of the three without a fresh bid. It has not gone unnoticed, though. Reuters reported in 2024 that activist investor Elliott and JD.com had both looked at making offers.

Why a deal could make sense

RBC points out that the three groups barely compete in the same countries, and that the top three retailers in most markets hold under 40% share. It estimates that a Currys and MediaMarktSaturn tie-up could unlock about £120m in purchasing savings, based on a 0.5% cut in combined cost of goods sold. For comparison, it expects Currys’ operating profit to reach around £270m this year.

Small margin gains matter too. Every 0.2 to 0.3 percentage points added to Currys’ operating margin would lift consensus earnings per share for 2028 and 2029 by 8% to 12%.

Trading and risks

Currys’ UK like-for-like sales grew 6% over the first 17 weeks of its financial year, in a market that was flat overall. The worry is chip prices, which have climbed about 50% since last summer and could dampen demand. RBC argues that pricier devices should at least boost sales of add-on services.

The bank expects adjusted pre-tax profit of £208m and £227m over the next two financial years, 3% to 5% ahead of consensus. Its bullish scenario values the shares at 235p, and its bearish one at 125p.

Source: Proactive Investors / RBC Capital Markets. This article is for information only and is not investment advice.