Carphone Dixons, or Dixons Warehouse? High street merger talks confirmed

Electronics stores Carphone Warehouse and Dixons have confirmed that they are in talks to merge, a deal which would create a £3.5bn FTSE 100 player.

by Andrew Saunders
Last Updated: 24 Mar 2014

Following a story on financial blog Betaville this morning, the two issued the following statement. ‘These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming’.  So the official version is that quite a bit of research and browsing has been done, but there is still way to go before either shopper hits the checkout.   

But things may be further along than they want us to believe. It's certainly not the first time that merger stories concerning the two have appeared - there are enough of the dreaded ‘synergies’ to ensure that the rumour mill grumbles to life on a regular basis - but this time it looks like the deal is really ‘in play’ as they say in the City.  

Currys and PC World owner Dixons - with a market cap of £1.7bn - is just the smaller of the two, and has made no secret of its desire to get more seriously into mobile gadgets, which a deal with CW would clearly provide.

Carphone Warehouse (market cap £1.8bn) on the other hand would get a second bite at trying to create the kind of broad-spectrum electronics retailer that its ill-fated tie up with Best Buy if the US was supposed to deliver. But that effort was killed off by the recession, and Best Buy sold its stake back to CW for £471m last April.  

CW’s founder and largest shareholder Charles Dunstone (who owns 23.4%) is said to be keen on the all-share deal, which would give him a smaller stake in a larger and more liquid company. According to Sky’s Mark Kleinman, Dixons CEO Sebastian James would head the combined group, with Dunstone as chairman. By this reckoning CW’s CEO Andrew Harrison would end up with the wooden spoon, deputy CEO or COO - the Hudl to James’s iPad Air.

The two companies have until 24 March to do the deal, although they can ask the City regulators for an extension. Dixons shares - up 70% in the last year - rose 5% on the news, with CW’s up a more modest 1%.

But the question on everyone’s lips is, what will they call it?

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