Carphone Warehouse and Dixons confirm all-share merger of equals

 

Alex Lawson
Thursday 15 May 2014 13:31
Comments

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.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in