Dixons and Carphone Warehouse confirm merger

Dixons and Carphone Warehouse have confirmed they are to merge their operations to create a £3.7bn retail giant

A few days ahead of the deadline on the 19 May to reveal its hand to the Takeover Panel Dixons and Carphone Warehouse have confirmed a merger to create a £3.7bn retail giant.

The two firms have been in merger discussions since February and could now create a joint entity with 2,900 stores across Europe if the tie-up gets the green light.

Because the two businesses operate at slightly different ends of the consumer retail market - with Dixons focused on computers and TVs with Carphone selling mobile phones and tablets - the management are not expecting store closures.

Dixons chief executive Sebastian James said that each retailers stores performed different functions but it would take advantage of the high street network to offer click and collect for customers.

"The ability to take what we have built in electrical retailing and add the profound expertise of Carphone Warehouse in connectivity would make us a leading force in retailing for a connected world.  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," he said.

The move also made sense in the analyst community with Jeremy Davies, CEO and co-founder of Context, highlighting the lack of overlap between the two operations.

"With Dixons large format store presence and Carphone’s multiple small store format, the merger from a purely footprint viewpoint makes sense, as this gives both customer sets the opportunity for additional services such as click and collect. However, just because the companies have merged does not mean that the challenges both companies are facing in future will go way, such as the explosion in online buying, decline in bricks and mortar retailing, and rapid growth in wifi connectivity challenging operator data revenues. Our recent reports show that 3G Tablet sales across Europe have fallen sharply in favour of wifi devices," he said.

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