London, May 15, 2014: In what is surely one of the big ticket mergers in recent times in the Internet of Things (IoT) business, Britain’s Carphone Warehouse and Dixons Retail have agreed to a 3.8 billion pound all-share merger. The move is subject to shareholders’ permission.
The new company will be called Dixons Carphone. It will see the company split 50/50 between Dixons Retail and Carphone Warehouses shareholders. Carphone Warehouse chief Sir Charles Dunstone will be chairman of the new group, while Dixons boss Sebastian James will be chief executive officer.
Carphone is Europe’s biggest independent mobile phone retailer while Dixons is Europe’s No. 2 electricals retailer. The new entity is likely to create a group with turnover of about 12 billion pounds, 2,900 stores and 45,000 staff, the companies said on Thursday.
The idea behind the merger is that although the two companies were operating in two complementary markets (mobile phones and consumer electronics), these markets were fast converging, what with the advent of the IoT. Thus, it made but sense for the two businesses to merge. Some analysts, though called the merger as “unwieldy”.
Both companies had on Feb. 24 this year revealed they were in merger talks and had been given a May 19 deadline by Britain’s Takeover Panel to agree a deal.
Under the arrangement, Dixons shareholders will receive 0.155 of a new Dixons Carphone Plc share in exchange for each Dixons share. Based on Wednesday’s closing prices, Carphone had a market value of 1.90 billion pounds and Dixons 1.87 billion pounds.
Dixons has some 950 Currys and PC World outlets, while Carphone Warehouse is England’s largest telecom retailer with over 2,000 stores and a 46 percent share of Virgin Mobile France.
Shares in Dixons were down 5.6 percent, while Carphone’s were down 3.7 percent by 0831 GMT. Shares in both companies have gained since they announced the tie-up talks.
Dixons also released a trading statement on Thursday, forecasting that its full-year underlying profit before tax would be at the top end of market expectations of 150 million pounds to 160 million pounds.
Image Credit: Carphone/Pinterest/Dixons
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