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Dixons Carphone formed by merger

Article By: ,  Financial Analyst
May 15, 2014 11:15 AM

A merger between Dixons Retail and Carphone Warehouse, worth billions of pounds, has been announced by the two companies.

Dixons Carphone has been formed after an equal shares merger was agreed between the two firms, with the total value of the deal revealed to be £3.8 billion.

Talks have been ongoing between the two companies for the last three months, but it is only today (May 15th) that news of a merger has been announced.

Dixons chief executive Sebastian James revealed that the company is in a strong financial position as it heads into the partnership with Carphone Warehouse. In a new trading update, Dixons stated that its full-year underlying sales were up three per cent, while like-for-like sales also rose three per cent.

"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,” said Mr James.

"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."

Future goals

Mr James told BBC Radio 4's Today programme that the merger between Dixons Retail and Carphone Warehouse is not a sign of “internal naval-gazing”, as it is instead “based on what is happening out in the world”.

He explained Dixons Carphone will seek to focus on devices that connect to the internet, such as smartphones, tablets and laptops, although the rise of the Internet of Things could soon shake up this industry.

Dixons said job cuts of two per cent will occur at the merged company, "as a result of the rationalisation of certain operational and support functions", but Carphone Warehouse stated that "significant job creation" is expected as part of the the new merger with Dixons Retail, with an increase of approximately four per cent suggested by the firm.

There are currently more than 500 Currys and PC World stores in the UK and Ireland owned by Dixons Retail, while Carphone Warehouse has 3,000 shops across Europe.

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