Dixons and Carphone Warehouse are at the beginning of merger talks, both firms’ boards confirmed today.
The technology retailer and the smartphone store would be worth £3.5 billion if they joined forces.
“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,” the companies said.
“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming,” the boards added.
It is a bold move for Dixons; it is slightly harder at this stage to see what’s in it for Carphone
Indeed, it’s not yet decided which firm will take the lead. Each firm is valued at about £1.7 billion, which is the the same 15.5 times forward earnings, according to the Financial Times – essentially, they’re seen as being equal in value by investors.
“No decision has been reached regarding the structuring of any such merger,” the statement continued. “Accordingly until further notice, for the purposes of the Code, both Dixons and Carphone Warehouse will be treated as offeree companies.”
Under the terms of the discussion, a decision must be made by 24 March.
Analysts suggested Dixons CEO Seb James was most likely to take over as chief executive of the merged firm. James has previously expressed a desire to extend the retailer further into mobile sales.
“In a world of connected devices, Dixons is under-exposed to the key area of mobile/smartphone retailing, and it is known that they were looking at the area,” retail analyst Nick Bubb told Reuters. “It is a bold move for Dixons; it is slightly harder at this stage to see what’s in it for Carphone.”
The deal discussions come a year after Carphone ended its joint venture with Best Buy, after the massive US tech retailer failed to find success in the UK.
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