The boards of mobile phone retailer Carphone Warehouse Group plc and electrical retail company Dixons Retail plc announced on Thursday that they have recommended an all-share merger of Carphone and Dixons, to form a new consumer electricals, mobiles, connectivity and related services company which will be known as Dixons Carphone plc.
Under the agreement, reportedly valued at GBP3.8bn, Dixons’ and Carphone’s shareholders will each hold exactly 50% of Dixons Carphone on a fully diluted basis taking into account existing share options and award schemes for both companies. Dixons Shareholders will receive 0.155 of a New Dixons Carphone Share in exchange for each Dixons Share. The merger is conditional on the approval of the shareholders of both companies.
Directors of Carphone and Dixons expect the combined group to achieve integrated mobile retailing and procurement synergies, together with cost savings, of at least GBP80m on a recurring basis. Almost half of these synergies and cost savings are expected to be delivered progressively in the financial year 2015/16, then in full during the financial year 2017/18.
On completion of the merger, Carphone’s chairman Sir Charles Dunstone will become the chairman of Dixons Carphone, while the deputy chairman of Carphone Roger Taylor and John Allan, chairman of Dixons will become co-deputy chairmen. John Allan will also serve as senior independent director.
In addition, Sebastian James, CEO of Dixons, will become CEO of the new company; Andrew Harrison, CEO of Carphone, will be appointed as deputy CEO; Humphrey Singer, CFO of Dixons, will serve as CFO; and Katie Bickerstaffe, CEO of UK & Ireland Dixons and Graham Stapleton, CEO of UK & Ireland Carphone will retain their current responsibilities, joining the Dixons Carphone Board as executive directors.
The Dixons Carphone Board will also include a further six non-executive directors, with John Gildersleeve, Baroness Morgan of Huyton and Gerry Murphy from Carphone and Tim How, Jock Lennox and Andrea Gisle Joosen from Dixons.
Sir Charles Dunstone, chairman of Carphone stated: “We are incredibly excited about the opportunity today’s news brings to our organisations, our consumers and our investors. Both Carphone and Dixons have a huge commitment to delivering the consumer the very best service, product and advice around the connected world. We have a deep respect for each other and we see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age. We are also creating jobs and we see many opportunities for further growth. This is a new chapter for both businesses and we are energised and proud to be part of what will be another fantastic journey for consumers and shareholders.”
John Allan, CBE, chairman of Dixons added: “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. 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.”