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Carphone and Dixons announce terms of £4bn merger

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Mobile phones specialist Carphone Warehouse has announced its £4bn merger with electricals retailer Dixons.

The merger is expected to accelerate the roll out of The Internet of Things to consumers as the fledging market for connected products grows.

The businesses will “create a leader in European consumer electricals, mobiles, connectivity and related services” the retailers said.

The merger is expected to deliver cost savings of £80m on a recurring basis.

Carphone founder Sir Charles Dunstone said: “We have a deep respect for each other and we see the merger of these two great companies as an opportunity to bring our skills together for the consumer and build a new retailer for the digital age.

“We are also creating jobs and we see many opportunities for further growth.”

The companies will merge its two head offices in Hemel Hempstead (Dixons) and North Acton (Carphone) to one place but no decision has been made on where or when that will be.

A spokesperson said the merger would increase total jobs by 4 per cent from 40,000 but the merging of the two head offices would “offset” the net increase to 2 per cent.

In a statement the company said: “Any changes related to the rationalisation are unlikely to take effect prior to 2015 and are anticipated to be implemented gradually over the three years after Completion.”

The news comes as Dixons announced total sales rose 3 per cent in the UK. “It is good to be in such a strong position as we embark on this adventure,” said Dixons chief executive Sebastian James.

Reasons for the deal given by the company are as follows: the ability to generate incremental value through a “seamless multichannel retail offer across a comprehensive range of products and connectivity services”; creating “substantial value enhancement by leveraging existing capabilities and providing services to global business partners” delivering “significant revenue growth through incremental service offerings.”

Carphone will be hoping for a more harmonious merger than its ill-fated 2008 deal with Best Buy which petered out after stiff competition from Dixons. It has been widely reported that the two boards of the businesses could prove difficult to reconcile.

David Alexander, Conlumino consultant commented: “It looks as though the store estates of the two businesses will be an ideal fit. Carphone’s largely high street estate will extend Dixons’ predominantly out-of-town presence into town and city centres, with this expanded presence providing extending the network of valuable click and collect points.”

Published on Thursday 15 May by Editorial Assistant

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