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Dixons and Carphone Warehouse confirm £3.7bn merger
With their powers combined... they are... Dix-house! No, Car-dix! No, Dixons Carphone
Dixons Retail and mobile phone shop Carphone Warehouse have confirmed their £3.7bn merger after months of talks, creating one of the biggest retailers in Blighty.
Dixons, which already owns Currys and PC World, will combine with the mobe-purveyor to form Dixons Carphone in a 50:50 merger, rather than an acquisition of one side by the other.
The two firms announced back in February that they were in talks to hop into bed together. The new group will have over 25,000 staff along with more than 500 Currys and PC World stores in the UK and Ireland and 2,000 Carphone Warehouse shops across Europe.
The companies said that after looking over their books, they reckoned that the newly combined group would be able to produce cost savings of at least £80m by financial year 2017/18, with half of them coming in the financial year 2015/16. They’re hoping to bank the savings with “integrated mobile retailing and procurement synergies” along with other cost cuts.
As Channel Reg reported earlier this week, Dixons admitted it had started redundancy consultations with staff at its HQ “to reduce central costs”, but insisted that the cuts had nothing to do with the proposed merger. The period of consultation is 45 days, the minimum length for a company planning to lay off 100 or more workers.
Current Dixons chief Sebastian James, who will be the CEO of the merged firm as well, tweeted today that the merger would be an opportunity for job creation.
Lots to do, but assuming this merger is completed, it'll be a fantastic platform for growth and job creation.— Sebastian James (@dixonsseb) May 15, 2014
Company papers on the merger said that there would be an increase of around four per cent of the combined group’s full-time employees by the end of 2016, but this would be partially offset “as a result of the rationalisation of certain operational and support functions”. After the dust settles, the firms expect a net increase of around two per cent in staff.
At the top, the companies said that Andrew Harrison, who is currently running Carphone Warehouse, will be deputy CEO and Humphrey Singer, finance director of Dixons, will be the new CFO. Carphone Warehouse chairman Sir Charles Dunstone gets to be the chair of the new tech empire, while John Allan, formerly chairman of Dixons, and Roger Taylor, who used to be deputy chair at Carphone Warehouse, take co-deputy chair positions.
Dixons announced some tidbits from its results for the year at the same time as revealing the details of the merger, putting underlying sales growth at three per cent for the full year and profit before tax at around £150m to £160m.
“It is good to be in such a strong position as we embark on this adventure,” Sebastian James said. ®