Carphone shares continue their ascent on merger talks with Dixons

Up 10 per cent since news broke

allan - potential role @ cpw

Shares in UK retailer Carphone Warehouse closed 8 per cent higher in London last night [24th February 2014] after it emerged that it was in merger talks with high street rival Dixons. In a move that is intended to ward off the encroachment of supermarkets like Tesco into the mobile sector, the two firms confirmed that talks were ongoing but were otherwise still at “a preliminary stage.” Carphone currently has around 800 outlets compared to Dixons 500 stores, but together the pair would constitute one of the biggest retail presences in Britain.
The two companies have until March 24 [2014] to agree a deal, although they can request an extension to that date from City regulators.

But such a merger would be a blow to Britain’s other major independent phone retailers Phone4U, which currently manages Dixons in-store phone business.

It’s expected if the deal goes ahead Sir Charles Dunstone would be chairman of the combined group, with a potential deputy chairman’s role for John Allan, the Dixons Retail chairman.

Andrew Harrison, Carphone’s chief executive, would probably take on a role as deputy chief executive or chief operating officer of the group.

But it’s not the first time the two sides have held talks about a deal, with discussions in the summer of 2011 falling apart because of the then disparity between the valuations of the two firms.

Just before Christmas shares in Carphone surged after it revealed it was seeking a premium listing on the London Stock Exchange, making its stock more appealing to a larger number of institutions.

Just under a year ago Carphone also acquired the other half of its European operation jointly owned with America’s Best Buy, in a deal costing £471 million.

It meant Carphone getting full control of CPW Europe, the region’s largest independent phone retailer with 2,377 stores.

In early trading today [25th February 2014], Carphone’s shares rose another 2 per cent to 337 pence as investors continued digesting news of the merger talks.

About Dave Evans

Dave Evans is a long established commentator on both the IT and cellular industries. His current focus is on share price trends within the sector. You can email him here
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