Shares jump on Carphone and Dixons merger talks

Merger could create a multi-billion pound High Street giant

Carphone Warehouse and Dixons are considering a merger that would create one of the biggest technology companies on the high street, as both businesses hope to tap into customers’ demands for one-stop shops for all their electrical needs.

Management now have until 24 March to agree a deal or walk away. Carphone Warehouse is keen to expand its range and reach as the market around mobile phones, tablets and computers becomes blurred, while Dixons, which operates as Currys PC World, wants to increase its mobile phone offering and to build on the customers it gained following Comet’s demise.

Analysts and investors welcomed the deal, as shares in both companies soared. Dixons closed up 6.7 per cent at 50.3p and Carphone Warehouse was up 8.8 per cent at 333p. The merged company would be worth more than £3.5bn and has the potential to dominate parts of Europe.

Dixons currently controls 22 per cent of the electricals market in the UK, 11.1 percentage points more than its next biggest rival Argos, according to analysts at Verdict. The electricals market is expected to grow by 3.3 per cent this year – the highest rate of growth since the recession.

Both companies remained tight-lipped, confirming only that discussions were taking place; however, Dixons boss Sebastian James said: “We’ve said for some time we’ve wanted to get into the phone market and this is one of four options we’ve seen... We can’t say who approached who, but obviously it’s a small industry and we all know each other well.

“We already have concession with Phones 4u in our stores, which are great, but we have always said we need to expand into the phone market even more.”

It is understood the Phones 4u contract is coming to an end later this year.

Carphone Warehouse founder Sir Charles Dunstone declined to comment when contacted by The Independent, but he did not rule out suggestions that he would become chairman of any merged business.

Matt Rubin, a retail analyst at Verdict, said the deal seemed like a natural fit. He said: “For Carphone Warehouse, it is becoming hard to distinguish between mobile phones, tablets and laptops, which are all merging into one and could continue to go even further in that direction.

“Meanwhile, Dixons has said it wants to improve its phone offer and could also take advantage of Carphone Warehouse’s store portfolio to extend its click-and-collect offer.”

For Carphone Warehouse, the deal could be seen as similar to a joint venture with Best Buy, when the phone service was installed in the US company’s stores. It was eventually bought out by Best Buy for more than £800m and proved highly successful.

But a similar project to launch Best Buy in the UK failed. The man who oversaw the deal with Best Buy was Andrew Harrison – who was subsequently promoted to chief executive of Carphone Warehouse and made clear that he wanted to form similar partnerships elsewhere.

More recently the phone company, founded from a basement flat in 1989 in London, has launched its Connected World business as bosses recognise that customers are keen to use staff’s knowledge and expertise to hook up all their electrical devices over wi-fi, controlled by their smartphones.

Dixons has also focused on its similar Know How business, which aims to advise customers on how to get the most from their computers and tablets, and offers software and hardware support. The company could also benefit from Carphone Warehouse’s high levels of customer service, which has historically lagged at Dixons.

A link up with Carphone Warehouse and Samsung, for the former to run phone stores for the South Korean mobile giant, could also interest Dixons, which is always keen to form closer relationships with big suppliers – especially Apple rivals because of the low margins made on Apple products by third-party retailers.

Analysts have also suggested that a deal could help douse the flames of excitement from online white goods appliance seller AO.com joining the stock market. Some investors had feared Dixons could lose out from the competition – yet a deal with Carphone Warehouse could see those worries washed away.

A recovery in the housing market – mortgage approvals are at five-year highs – would also be attractive to Carphone Warehouse, with the boost in sales expected at Dixons. 

News
The surrealist comedian at the Q Awards in 2010
people
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
PROMOTED VIDEO
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to American media group
Extras
indybest
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidate on the verge of tears as they were ejected from the boardroom
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
ebooksAn unforgettable anthology of contemporary reportage
News
Wilko Johnson is currently on his farewell tour
people
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?