Retailers Dixons and Carphone in talks over merger

The owner of Currys and PC World and Europe’s largest independent mobile phone retailer said that the discussions are at early stage and there was no certainty that a merger would definitely take place.

The two companies are both valued at around £1.75bn on the stock market. Dixons operates more than 500 Currys and PC World stores in the UK and Ireland.

Carphone Warehouse, which was founded by Charles Dunstone in 1989, has more than 2,000 stores across Europe. Mr Dunstone has a 23.5 per cent stake in the retailer.

In a joint statement, the two firms said: “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.”

Unlike some of their competitors, both Dixons and Carphone Warehouse have weathered the tough conditions in UK retail. Shares in Dixons have soared by 74 per cent over the past year, while Carphone Warehouse’s stock has risen by 51 per cent.

Dixons already has an ongoing relationship with Phones4U in a select number of stores but analysts believe this contract is near to expiry. Experts agree that Dixons is falling behind other retailers in its exposure to smartphones.

Meanwhile, Carphone Warehouse has recently agreed a deal with Samsung to operate standalone stores for them in the UK and across Europe.

Patrick O’Brien is lead retail analyst at Verdict Research. He said: “Shareholder sentiment [about a merger] is quite positive with both companies increasing in value straightaway…

“The benefits for Carphone Warehouse are not immediately apparent but it does seem to make more sense for Dixons. But until we’ve heard the strategic imperative behind it we are just guessing.”

The Takeover Panel requires the two companies to announce by March 24 a firm intention to make an offer.