Carphone Warehouse and Dixons plan £3.7bn merger
The high-street electronics company Dixons and mobile phone retailer Carphone Warehouse said on Thursday that they were looking to merge their two companies into a £3.7bn combined operation.
The deal had been structured as "a merger of equals" the companies said, with the shareholders of each company owning 50 percent of the combined corporation. Carphone Warehouse has a market cap of £1.9bn and Dixon's one of £1.87bn, based on the companies' closing prices on Wednesday.
In a statement, the companies said that they wanted to create a "leader in European consumer electricals, mobiles, connectivity and related services". The combined company will be called Dixons Carphone plc.
Sir Charles Dunstone, Carphone chairman and founder, told Reuters that: "We see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age."
Under the terms of the deal, the companies said it would be "structured as a scheme of arrangement" which is a court-approved agreement between a company and its shareholders or creditors.
Both these companies have been finding life of on the high-street getting tougher as the online model is being exploited so successfully by companies such as Amazon, Google, and Microsoft. Amazon, for example, dwarfs the high-street names with a turnover in excess of $60bn.
However, one area that Dixons Carphone could be looking to exploit is the blossoming business of the Internet of Things (IoT). The idea underlining the IoT is that increasingly computers, laptops and mobile phones are combining and people are becoming less concerned about the minutiae of computers and more concerned with devices that will have some computing power but are not standalone computers in their own right.
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