Owner of Currys and PC World, Dixons is in talks with Carphone Warehouse about a possible merger, it has been revealed today. Talks are said to be in the very early stages and no details of the potential arrangement are available, nor are the two companies willing to confirm that the deal will definitely go ahead, at this time.
There are over five hundred Currys and PC World stores across the UK and Ireland, and more than two thousand Carphone Warehouse stores. When news of the possible merger went public, shares in both companies jumped: Dixons by 7.5% and Carphone Warehouse by 6%.
Dixons has clearly thrived in light of the failure of its competitor, Comet, reporting strong Christmas trading, with sales up 5% between the beginning of October and early January. Carphone Warehouse also reported an increase in sales by 3% over a similar period, so this deal could be coming just at the right time, as both companies are doing well in their respective markets.
However, Maureen Hinton, retail research director at Conlumino, has suggested that whilst the merger could be good news for the two companies involved, it could spell trouble for consumers, as fewer firms in the market would mean less competition over price.
It has been known for some time that Dixons has been looking to break into the mobile/smartphone market, and this merger could be the answer for the electronics retailer. As Hinton states: “It is slightly harder at this stage to see what’s in it for Carphone”. Clearly, both companies are hoping 1+1 will equal more than 2.
Interestingly, Phones4U, a rival of Carphone Warehouse, is currently a partner of Dixons, offering mobile phones to PC World and Currys customers.
If you need advice about a potential merger or acquisition, speak to your adviser. Most accountants offer impartial advice with a free, no obligation initial consultation.
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