Currys plc (LON:CURY) has announced that it has entered into an agreement for the sale of Dixons South East Europe A.E.V.E., the holding company of Currys’ entire Greece and Cyprus retail business, trading as Kotsovolos, to Public Power Corporation S.A. for an enterprise value of €200 million (£175 million) on a debt free, cash free basis and excluding lease liabilities.
Following the Group’s strategic review which was announced on 16 June 2023 and having now agreed the terms of a sale, the Currys board of directors believes the proposed Disposal has strong strategic rationale and represents an attractive outcome for the Company’s shareholders. The Disposal will simplify the Group’s structure enabling it to focus on its larger markets of the UK & Ireland and Nordics, while simultaneously strengthening Currys’ balance sheet, increasing flexibility to invest and grow the business and improve shareholder returns.
Transaction Highlights
· The enterprise value of €200 million (£175 million), adjusted to include lease liabilities of €97 million (£85 million) as at 29 April 2023, implies a multiple of 6x adjusted EBITDA1 of €49 million (£43 million) and 14x adjusted EBIT[1] of €21 million (£18 million)
· The price reflects the strategic value of Kotsovolos’ market leading position, with strong brand awareness, a strong omnichannel platform, and a diverse mix of products and services;
· The multiple represents a material premium to the valuation at which Currys’ shares trade today, or have done over the last 12 months and consequently, the Board believes that significantly greater value can be realised for Shareholders from the disposal, when compared to retaining Kotsovolos within the Group;
· Net cash proceeds of the disposal are expected to be approximately £156 million (€179 million) at completion, after taking into account transaction and separation costs, intercompany balances and cash in the business;
· In the short term, the Board intends to use the proceeds to reduce net debt and then at the appropriate time, following peak trading, enter into discussions with pension trustees regarding the potential to reduce the pension fund’s accounting net deficit and required future contributions. Reducing indebtedness may also provide, at the appropriate time, the Group with greater flexibility to invest to grow the business, after which Currys will also explore the potential to return any surplus capital to Shareholders;
· The Disposal was unanimously agreed by the Board to be in the best interests of Shareholders; and
enter into discussions with pension trustees regarding the potential to reduce the pension fund’s accounting net deficit and required future contributions. Reducing indebtedness may also provide, at the appropriate time, the Group with greater flexibility to invest to grow the business, after which Currys will also explore the potential to return any surplus capital to Shareholders;
· The Disposal was unanimously agreed by the Board to be in the best interests of Shareholders; and
· The Disposal is expected to complete in the first quarter of 2024, subject to approval by Shareholders, merger control clearance from the European Commission or the Hellenic Competition Commission and certain other conditions.
Commenting on the Transaction, Alex Baldock, Currys Chief Executive said:
“This proposed sale of Kotsovolos is an excellent outcome for Currys and for our shareholders. It recognises Kotsovolos’s value and accelerates its realisation. As a Group, we’re focused on maintaining our encouraging momentum in the UK&I and getting the Nordics back on track; this disposal will further strengthen the foundations on which we do both.
Kotsovolos is a fine business that we’ve been proud to own. I’d like to thank our Greek colleagues for everything they’ve done for the Group, and wish them every future success.”
Citigroup Global Markets Limited is acting as sponsor and sole financial advisor to Currys on the Disposal.
