Britain's Dixons, Carphone Warehouse agree to merge

15th May 2014, Comments 0 comments

British electrical goods retailer Dixons and mobile phone group Carphone Warehouse agreed on Thursday to merge, creating a European leader in consumer electricals, mobile phones and connectivity.

The new group, Dixons Carphone, will have a combined stock market value of about £3.7 billion ($6.2 billion, 4.5 billion euros) and revenues in excess of £12 billion.

It will have more than 43,000 staff across Europe and will be equally owned by the shareholders of each company.

Dixons Carphone will seek to tap into an anticipated boom in demand for electronic devices which are connected online and to smartphones, a phenomenon more widely known as the "Internet of Things".

Analysts predict that smartphones, tablet computers and rapid Internet speeds will soon allow households to control items such as washing machines, fridges and boilers via mobile devices.

"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 Dixons chief executive Sebastian 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."

James will also become chief executive of the new group, while Carphone founder Charles Dunstone will be the chairman.

"We are incredibly excited about the opportunity today's news brings," added Dunstone in the statement.

"We have a deep respect for each other and we see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age."

The two groups revealed the recommended all-share merger in a statement to the London Stock Exchange earlier on Thursday, having already flagged their preliminary discussions back in February.

"The boards of Carphone and Dixons believe that the merger will deliver significant value to shareholders through a combination of enhanced commercial opportunities and operating synergies," the pair said in the statement.

The merger is expected to deliver annual savings of at least £80 million per year, although there will be restructuring costs of £55 million to £60 million. There will also be additional investment of £70 million to £80 million in the combined business.

Dixons Retail Group has 943 shops across Europe, including more than 500 branches in Britain under the brand names Currys and PC World.

Carphone Warehouse is one of Europe's largest independent retailers of mobile phones, with 2,000 stores in Europe, including 800 in Britain.

"We see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age," added Dunstone.


© 2014 AFP

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