Unwanted guest at the partyShares in Britain’s Carphone Warehouse took a dive last night [24th March 2014] after it emerged that its merger target Dixons was also in talks with High Street rival Phones4U. Carphone’s overtures towards Phones4U were seen as a gambit to ward off the encroachment of supermarkets like Tesco into the mobile sector. Last month, when it was announced the two sides were in merger discussions, Carphone’s shares soared 10 per cent. But last night they went into reverse, falling 4.83 per cent amid fears that the £3.8 billion deal was off. It followed reports that UK private equity firm BC Partners, which owns Phones4U, had also thrown its hat into the ring, meeting with senior Dixons executives to talk about the possibility of a rival merger.
But Phones4U has a market cap of only about half that of Dixons, while BC Partners’ modus operandi tends to be predicated on selling businesses rather than merging them.
Meanwhile British watchdog The Takeover Panel yesterday granted a seven week extension to talks between Dixons and Carphone, in which the deal is said to be very much “on focus.”
Carphone currently has around 800 outlets to compared to Dixons 500 stores, though Phones4U currently operates mini-stores in about 160 Currys and PC World branches – which are owned by Dixons.