Dixons and Carphone Warehouse in merger talks

In a statement to the stock exchange this morning (24 February), the companies said talks were at a “very preliminary stage” but no transaction is imminent. They also said no decision has been made regarding the structure of the resulting company after a merger.

Under stock market rules, the two companies have a month to announce whether the tie-up is going ahead.

Any deal would create a retailer with a huge footprint in mobile phone and technology retail. Carphone Warehouse has more than 2,000 stores across 7 countries, while Dixons Retail owns 1,154 stores including brands Currys and PC World in the UK.

The pair have both survived the high street downturn to post sales increases. Dixons reported like-for-like sales were up 5 per cent in the UK and Ireland over the Christmas period, while Carphone Warehouse saw sales rise 3 per cent in the quarter to 28 December.

Dixons already has a partnership with Carphone Warehouse rival Phones4U, which runs mobile phone concessions in Currys. Carphone Warehouse previously launched a joint venture with US electronics firm Best Buy in Europe, but the partnership was disbanded in April last year when Best Buy sold its stake back to Carphone Warehouse.

Based on combined market capitalisations, the merged firm would have a value of more than £3.5bn. The resulting company could expect significant synergies, although it is not known how it would impact marketing.

Dixons has recently taken steps to shake up its marketing, appointing a new agency in AMV BBDO and hiring Telefonica Digital’s CMO Gary Booker as its chief marketing officer for the UK and Ireland. Carphone Warehouse, meanwhile, has recently inked a deal to launch standalone Samsung shops aimed at competing with Apple’s retail stores.

It also launched a marketing campaign at the weekend to promote its new in-store tablet shopping service, Pin Point.