Dixons and Carphone Warehouse in merger talks

Dixons Retail Group said the discussions are at an early stage and that no decisions have been made about how a tie-up might be structured.

Both companies are valued at around £1.8bn on the London stock market, following a rise of five per cent for shares in Dixons and three per cent for Carphone Warehouse.

Carphone was founded in 1989 by Charles Dunstone, who still owns 23% of the company. It has more than 2,000 stores across Europe.

The business was recently boosted by a major deal to open 60 Samsung-branded stores across Europe, including a third on UK high streets.

Dixons has more than 500 stores across the UK and Ireland, predominantly in out-of-town retail parks and increasingly as ‘2-in-1’ Currys PC World stores. There is also a sizeable store estate in northern Europe.

Both companies have weathered the difficult trading conditions in UK retail, with Dixons recently reporting its second year in a row of improved Christmas trading as it benefits from the demise of rival Comet.

The company has an ongoing relationship with Phones4U, which sees Carphone’s rival offer PC World and Currys customers the latest mobile technology in a number of stores.

Carphone recently said like-for-like revenues rose 5% in the UK during the quarter to December 28 as its performance was boosted by the popularity of more expensive smartphones.

The two companies said today: “The boards of Dixons and Carphone Warehouse note the recent speculation and confirm that the two companies are in preliminary discussions regarding a possible merger of Dixons and Carphone Warehouse.

“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming. No decision has been reached regarding the structuring of any such merger.”

A merger of Dixons and Carphone Warehouse would create an electronics giant with an estimated market value of £3.6 billion.

Between them, the companies have more than 3,000 stores with annual sales of more than £12 billion.

Dixons Retail Group, which specialises in selling mass market technology consumer and electronic products, employs more than 31,000 people in 12 countries and owns PC World and Currys. The retailer said on its website that more than 100 million people shop with them every year online and in over 900 Dixons Group stores.

The announcement comes after Dixons reported a strong Christmas sales period with like-for-like sales in the UK and Ireland rising 5% in the three months to January 4 and internet sales up 3%.

The company said its Boxing Day sales had been the strongest in its UK history.

Carphone Warehouse, which has more than 2,000 stores, recently said like-for-like revenues rose 5% in the UK during the quarter to December 28 as its performance was boosted by the popularity of more expensive smartphones.

The younger of the two companies, it was was founded in 1989 by Charles Dunstone, who still owns 23% of the company.

The business was recently boosted by a major deal to open 60 Samsung-branded stores across Europe, including a third on UK high streets.

Dixons, founded in the 1930s, and with its headquarters in Hemel Hempstead, Herts, is one of the largest consumer electronics retailers in Europe.