RETAIL giants Dixons Retail and Carphone Warehouse have confirmed they are in merger talks that could create an electrical goods and mobile-phone group, with a market capitalisation of more than £3.4bn (€4.1bn).
Between them the companies have more than 1,000 staff in Ireland.
"The boards of Dixons and Carphone Warehouse note the recent speculation and confirm that the two companies are in preliminary discussions regarding a possible merger of Dixons and Carphone Warehouse," the firms said in a joint state- ment to the London Stock Exchange.
Dixons is Europe's second biggest electricals retailer by sales, and Carphone is Europe's largest independent mobile-phone retailer.
The companies said talks were at a "very prelim- inary" stage and there was no certainty a transaction would occur. They added that no decision had been reached regarding the structuring of any merger. Analysts said an all-share merger of equals seemed the most likely deal.
At their closing prices on Friday, Carphone was valued at £1.77bn, Dixons at £1.72bn.
Shares in Dixons were up 8pc yesterday as the news broke. Carphone Warehouse stock was up 0.3pc.
"In a world of connected devices, Dixons is under-exposed to the key area of mobile/smartphone retailing, and it is known that they were looking at the area," said independent retail analyst Nick Bubb.
"It is a bold move for Dixons; it is slightly harder at this stage to see what's in it for Carphone Warehouse."
Dixons' Chief Executive Seb James has made no secret of his desire to increase the company's exposure to mobile phones.
Strong demand for smartphones and tablets in Britain has been driving Car- phone's share price rise, offsetting weakness in its French business.
Analysts said key to any deal would be the stance taken by Charles Dunstone, who founded Carphone in 1989, is its chairman and its largest shareholder with a 23.5 pc stake.
Britain's Takeover Panel will require the companies to announce by March 24 any firm intention to make an offer.
Shares in Dixons have soared 74pc over the last year, ahead of gains of 51pc in Carphone Warehouse's stock and against the 21pc rise posted by Britain's midcap index, of which they are both constituents. (Reuters)