Dixons and Carphone Warehouse merge in £3.8bn deal

New entity to be called Dixons Carphone

Dixons Retail plans to create a "world-class British retailer for the new digital age" as it announces its intention to merge with Carphone Warehouse in a £3.8bn deal.

The merger will see both firms' shareholders hold exactly 50 per cent of the new entity, which will be called Dixons Carphone.

Dixons – owner of PC World and Currys – operates more than 500 stores across the UK and Ireland, while Carphone Warehouse has about 2,000 across Europe.

Dixons chief executive Sebastian James said when the deal – which is subject to shareholder approval – closes, it will make the firm a "leading force" in the connected-technology world.

"The ability to take what we have built in electrical retailing and add the profound expertise of Carphone Warehouse in connectivity would make us a leading force in retailing for a connected world," he said.

"Together, we can create a seamless experience for our customers that will enable technology to deliver what it promises: that is, to make their lives better."

Dixons made the announcement as part of a trading update when it hailed a four per cent jump in Q4 group revenue. This was driven by what James claimed was a better-than-expected performance from the UK, where sales rose three per cent over the quarter, which ended on 30 April.

Carphone Warehouse's chairman Sir Charles Dunstone, who will become chairman of Dixons when the deal is finalised, said the move will create a leading digital brand.

"This merger will create a new, world-class British retailer for the new digital age, with new opportunities for growth and greater scale and reach," he said.

"Colleagues of both complementary businesses are experts in their fields, with a shared passion for technology, connectivity and brilliant service. Coming together when both companies are flourishing, we will create a stronger business for our customers, colleagues and shareholders – for now and the future."

But analyst Context said the duo's choice of name for the new entity does not reflect its digital ambitions.

"The new name Dixons Carphone hardly presages a new start, using as it does a last-century technology word for a 21st century company aiming to straddle the new universe of retail, online and connected trading," said its chief executive Jeremy Davies.