Dixons and Carphone Warehouse to merge in £3.8bn deal

Currys and PC World owner Dixons is to merge with the Carphone Warehouse in a deal reported to be worth £3.8bn.

The merger is set to create an electricals retail giant known as Dixons Carphone, which will combine Carphone Warehouse’s expertise in smartphones and tablets with Dixons’ reputation for electrical appliances.

Dixons and Carphone shareholders will each own 50% of the company. Shares in Dixons Retail, the owner of Currys and PC World, and mobile phone retailer Carphone Warehouse have fallen sharply after the two companies announced a merger deal worth £3.8bn.

The companies said the deal will provide global growth opportunities, cost savings of £80m by the financial year 2017/18, and improved scale and reach. New jobs will also be created, according to Carphone Warehouse chairman Sir Charles Dunstone.
The merger was unveiled by Dixons yesterday when the electrical appliance company released a trading statement for the fourth quarter and full-year to 30th April 2014. It achieved like-for-like growth of 3% for the year ending 30th April.

The new firm will be known as Dixons Carphone, with ownership split equally between the two firms’ shareholders, but analysts expressed scepticism about the proposed link up.

David Alexander, consultant at Conlumino, said: “Although there are plenty of reasons to view the merger in a positive light, the history of [mergers and acquisitions] is littered with the corpses of failed unions.

“Carphone Warehouse itself is no stranger to this, having seen its partnership with US electronics giant Best Buy in 2008 peter out three years later in the face of intense competition from Dixons.”

“We see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age,” said Carphone’s chairman Sir Charles Dunstone, who will become chairman of Dixons Carphone.
John Allan, chairman of Dixons, who will become co-deputy chairman and senior independent director of the new company, added: “This merger will create a new, world class British retailer for the new digital age, with new opportunities for growth and greater scale and reach.”

Dixons boss Sebastian James, who will be appointed CEO on completion of the deal, said: “Together, we can create a seamless experience for our customers that will enable technology to deliver what it promises – that is, to make their lives better.”-
Dixons operates more than 500 Currys and PC World stores in the UK and Ireland and Carphone Warehouse by comparison operates more than 2,000 stores across Europe.