Financial News

  • 7 May 2014, 10:26

Carphone And Dixons Set To Unveil 4bn Merger

Carphone Warehouse and Dixons Retail are poised to set the seal on a 3.7bn merger of equals that will create one of Britain's biggest high street groups.

Sky News has learnt that the two companies will make a statement to outline concrete details of their tie-up before a Takeover Panel deadline on May 19.

The terms of the merger, which will see the creation of a new mobile phone and electrical goods retailer likely to be known as Dixons Carphone Group plc, have been broadly agreed in recent days, according to people close to the discussions.

The final name has not yet been formally agreed by the two companies' boards, they added.

The transaction will be structured as a 50-50 merger of equals, which will ignore the fact that Carphone's market capitalisation has been marginally higher than that of Dixons since preliminary discussions were confirmed in February, they said.

Sir Charles Dunstone, the Carphone co-founder, is to be chairman of the combined group, with Dixons occupying the top two executive roles in the form of Sebastian James, chief executive, and Humphrey Singer, chief financial officer.

Andrew Harrison, Carphone's chief executive, will become deputy chief executive, while Roger Taylor, deputy chairman of Carphone, and John Allan, the Dixons Retail chairman, will be named deputy chairmen of the new company.

Some of the existing non-executives on the boards of Carphone and Dixons are set to miss out on roles at the combined group and will be informed in the coming days.

The opportunity for cost savings from a merger will be restricted by the limited overlap between the two retailers' product bases but an insider conceded today that there would be "some" head office job cuts resulting from the merger.

A source close to the deal added that the newly-merged company might identify a new head office location rather than moving to either Carphone or Dixons' existing base.

The new group will have a powerful place on UK high streets, with Dixons currently operating more than 500 stores and Carphone almost 800.

The rationale for the new business will be its ability to serve consumers in the "connected world" with mobile devices and electrical goods increasingly converging.

News that the merger talks are so close to resulting in a formal deal may end any lingering hopes of Dixons' rival, Phones4U of scuppering the deal.

Sky News disclosed in March that BC Partners, Phones4U's owner, was attempting to gatecrash the merger in order to protect its existing mobile phone retailing joint venture with Dixons.

Carphone and Dixons declined to comment.

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