Dixons and Carphone Warehouse have confirmed they are in the early stages of talks with a view to creating a tie-up that would create a high street retail tech giant worth around £3.5bn.
The two retailers have revealed that preliminary talks are underway in a statement this morning and now have a month to make clear whether or not a formal merger offer will materialise.
"These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming," was the wording on the joint statement with the firms also pointing out that, "No decision has been reached regarding the structuring of any such merger."
Talks initially started because of plans that Carphone Warehouse had to take over the running of the in-store mobile phone concessions in Dixons which are currently handled by Phone4U.
The combination of the two retailers would create a £3.5bn entity with a network of 3,000 stores in the UK and Europe and would bring complementary expertise to both parties.
The last time Carphone Warehouse flirted with a move into the Dixons heartland was with a joint venture with US retailer Best Buy but after a couple of years and the opening of 11 UK stores and an online operation the shutters came down on that relationship.