Financial News

  • 25 March 2014, 11:44

Phones4u Bids To Crash Dixons-Carphone Deal

The private equity group which owns Phones4u has approached Dixons in an attempt to gatecrash the electrical goods chain's planned merger with Carphone Warehouse.

Sky News understands that BC Partners sounded out senior Dixons executives about a possible tie-up in the days following the emergence of merger talks between Dixons and Carphone in late February.

It is unclear whether those talks between BC Partners and Dixons remain current, and people close to the situation suggested that the prospect of derailing the combination was remote.

News of the discussions comes on the day that Dixons and Carphone announced that they had secured a seven-week extension from City watchdogs in an attempt to finalise their 3.8bn merger.

For BC Partners, which has owned Phones4u since 2011, identifying a way of gatecrashing the Carphone-Dixons deal would be a valuable way of protecting its own commercial interests.

Phones4u has had a joint venture with Dixons since July 2010, under which the mobile phone retailer operates stores in 150 Currys and PC World outlets.

The joint venture expires within the next 12 months, and Phones4u's value could be undermined if it loses the Dixons contract without securing replacement revenues.

Dixons is the second-biggest electrical retailer in Europe, while Carphone Warehouse is Europe's largest independent mobile phone retailer.

A tie-up between the two companies would create a group with about 2,900 outlets and a place in the FTSE-100 index.

"Since the announcement of February 24 was made when discussions were at a very preliminary stage, both parties have agreed that they require more time to evaluate a potential merger of the two businesses," the companies said in separate statements to the London Stock Exchange on Monday.

BC Partners declined to comment.