Dixons Retail Plc in talks over a possible merger with Carphone Warehouse Group

Currently, Dixons Retail Plc is the biggest consumer-electronics retailer in the U.K. The company announced that it is negotiating an eventual merger with Carphone Warehouse Group Plc.

The two companies, whose combined revenue is estimated to about 12 billion pounds (20 billion dollars), made an official statement today, revealing that negotiations between them are at an early stage and the outcome is still to be seen, because a transaction is not certain at this time. They also explained that they have not yet reached a decision about the structure of such a deal.

The negotiations between the companies come after years of speculations about an eventual merger. In 2011 the Financial Times reported that the companies put an end of the talks due to valuation.

However, analysts believe that a collaboration and combined business would give the companies a better opportunity to benefit from the growing demand for mobile devices such as tablets and mobile phones. Such a deal would also make the companies more resistant to competition.

One of the analysts working for Kantar Retail – Bryan Roberts – said in a telephone interview, which was cited by Bloomberg: “This makes a great deal of sense for both parties. Dixons can bring its significant buying power in tablets for Carphone’s high street presence.”

Currently, Dixons Retail Plc has about 950 outlets, including the Currys chain in the U.K., where customers can find a variety of goods from washing machines to televisions. It is also the owner of the U.K. PC World, as well as Elkjop, which is considered as the Scandinavian market leader, and Kotsovolos in Greece. A 3%-increase in group same-store sales was reported by the retailer for the two months through on January the 4th.

Dixons Retail Plc rose by 6.90% to 50.41 pence in London by 15:24 GMT, marking a one-year change of +90.21%. According to the Financial Times, the 15 analysts offering 12-month price targets for Dixons Retail Pls have a median target of $56.00, with a high estimate of $65.00 and a low estimate of $41.00. The median estimate represents a 18.74% increase from the last close of 47.16.