Carphone Warehouse and Dixons have announced an all-share merger of equals in a deal worth £3.8 billion as the high street giants aim to build a multi-billion pound electronics business.
However, the City was not convinced, with Dixons, which owns Currys and PC World, falling 3.8 per cent to 48.95p and Carphone off 2.4 per cent to 320p, despite the latter pledging to avoid the mistakes made in its failed joint venture with United States giant Best Buy.
“Dixons is pretty much the same business model as Best Buy,” said CMC Markets analyst Jasper Lawler. “Investors are probably thinking there’s not a good history of cost saving here.”
Carphone entered into an ill-fated venture with Best Buy in 2008, but the US group retreated in 2011 to fight intense competition in the States following a lacklustre performance against online players and Dixons in the UK.
Carphone chief executive Andrew Harrison, who will become deputy chief executive of the new company, said: “Best Buy was a different era — it was trying to build market share at a difficult economic time. Today is two market leaders who are flourishing coming together.”
The pair today confirmed speculation talks over the deal, which began in February, had been completed with a 50-50 partnership called Dixons Carphone.They hope to strip out £80 million of costs by 2018 as they combine their assets and buy products from suppliers together.
The retailers, who employ 43,000 staff, estimate 860 jobs will be axed when they merge head offices. However, 1700 jobs will be created, largely on the shop floor, as they attempt to offer a better service.
Dixons boss Sebastian James will be the chief executive of the new company, Carphone founder Sir Charles Dunstone its chairman and Carphone boss Andrew Harrison will be deputy chief executive.
James, who will head the new entity, said: “With Best Buy we walloped them and that was great fun. This is different. We are the market leader and we are marrying at a time when both businesses are flourishing. We have made a modest upgrade to our profit forecasts and customers like us more than ever before.”