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Carphone Warehouse, Dixons embroiled in £3.7bn merger rumour

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Sir Charles Dunstone once told your humble correspondent that he would never have more than 50 shops.

Today his Carphone Warehouse empire has more 2,000 shops across Europe, and is rumoured to be about to add another 500 – through a merger with PC World and Currys owner Dixons.

Discussions have been going on since February, we're told, and the companies just asked for a deadline extension from the Takeover Panel, the City's mergers-and-acquisitions regulator. An announcement is expected this week, ahead of a revised deadline of 19 May.

The two businesses have a combined market capitalisation of £3.7bn; a merger will create one of the biggest retailers in the UK with more than 25,000 staff. Sky News claimed the proposed name of the merged enterprise is Dixons Carphone Group, but this may change. The move would be a 50:50 merger of equals rather than a buyout of one side by the other.

Sir Charles will become chairman of the new firm, if the biz gobble goes ahead, with Dixon’s Sebastian James and Humphrey Singer taking on the roles of chief executive and chief financial officer respectively.

The merger would be a blow for Phones4u, which has concessions within Currys and has tried to block the merger. As Dixons doesn’t sell phones directly, there is less likely to be a regulatory problem.

It’s claimed the lack of product overlap between the two businesses will keep redundancies to a minimum, but with synergies between the two businesses a key reason for the merger there is bound to be an impact on the head office and support departments.

The two companies have very different corporate cultures and while a merger might be financially sensible there will need to be a lot of understanding between Dixons' and Carphone's respective bods. ®

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