James Ashton: Carphone Warehouse and Dixons Retail - another unequal marriage?
As Sir Charles Dunstone and Sebastian James played happy families at the top of the Shard on Thursday, I was racking my brain for a merger of equals that has succeeded in being just that. Carphone Warehouse and Dixons Retail have had almost three months since talks were disclosed in late February to dial up an ideal management structure for this hi-tech, high street giant with 2,900 stores in at least nine countries. Yet they managed to unveil a classic fudge.
I counted one chairman, two deputy chairmen, a chief executive, a deputy chief executive and two UK chief executives. Combining the top mobile phone seller and electricals expert squeezes out competitors and should squeeze better deals from smartphone and tablet suppliers, but directors have yet to put the squeeze on themselves. It won't last. To drive any business forward requires one prevailing culture and strategy, one person who is undeniably in charge. There is no time in the commercial world for tiptoeing around.
The all-smiles start to any merger of equals quickly dissipates, not least because shareholders order egotistical managers to sort themselves out. More than a decade ago, Fidelity's Anthony Bolton orchestrated the exit of Michael Green from ITV just as the company was being created from the merger of Carlton and Granada, leaving Charles Allen as top dog. It was a similar story when Classic FM's owner GWR merged with Capital Radio.
Nor did Mick Davis last long working with his former student Ivan Glasenberg when Glencore was finally reunited with the miner Xstrata, created from the commodities trader's unloved coal division. The proposal of a ludicrous £30m no-strings retention package might have had something to do with the outcome.
The only successful merger of equals I can think of is when the mobile phone firm EE was forged by combining T-Mobile and Orange's UK arms. But even that business began life with a top-heavy management team and took a long time to gain traction.
Dixons' Mr James described himself as the "blushing bride" in this week's marriage. Mr Dunstone holds a 12 per cent stake in the new business, so it's a fair guess that several members of the Dixons team will soon be free to hunt for new beaux.
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