High street firms talk merger

THE OWNER of PC World and Currys has revealed it is in talks with mobile phone retailer Carphone Warehouse over a potential merger deal.

Dixons Retail Group yesterday said the discussions were at an early stage and that no decisions have been made about how a tie-up might be structured.

Both companies are valued at around £1.8 billion on the London stock market.

“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,” they said yesterday.

“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming.”

Dixons has more than 500 stores across the UK and Ireland, predominantly in out-of-town retail parks and increasingly as ‘2-in-1’ Currys PC World stores.

There is also a sizeable store estate in northern Europe.

Rupert Eastell, head of retail at professional services firm Baker Tilly, said the proposal offered “more obvious advantages for Dixons” which would benefit from Carphone Warehouse’s expertise in mobile technology and customer service.

“Carphone, on the other hand, is set for steady growth, it is very focused on store profitability and has a model that works, so it doesn’t appear to have so much to gain,” he said.

Reports yesterday suggested Dixons chief executive Sebastian James could be set to lead the new entity, with Carphone Warehouse founder Sir Charles Dunstone as chairman.

Both companies have weathered the difficult trading conditions in UK retail, with Dixons recently reporting a second year of improved Christmas trading as it benefits from the demise of rival Comet.

Carphone said like-for-like revenues rose 5% in the UK during the quarter to December 28 as its performance was boosted by the popularity of more expensive smartphones.