Carphone Warehouse and Dixons both saw their stocks rise during trading yesterday (February 24th) after the two companies confirmed that they are in talks over a potential merger.
Dixons Retail, which is the owner of Currys and PC World, revealed that talks between the two companies are still at an early stage, but investors responded strongly to the news.
A statement from the two firms said: "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."
Dixons Retail saw its stocks rise by 7.5 per cent following the release of the statement, while Carphone Warehouse was up six per cent on news of the potential merger of the companies.
The statement added: "These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming. No decision has been reached regarding the structuring of any such merger."
Maureen Hinton, retail research director at Conlumino, told BBC News that a merger between the two firms would suit them both. She explained that they are both in "very competitive" sectors and a merger could allow them to pool resources and make the most of the rise in ecommerce that has taken over the retail industry in the last few years.
"Quite a lot of players have left the market as they just can't survive," she added. "It just seems consolidation is the best way to go."
Shares in Carphone Warehouse are up again in the early stages of trading this morning and were almost one per cent higher by 08:30 GMT.
Stocks in Dixons Retail had fallen by the same time however, losing 0.24 per cent to erase some of the strong gains piled up by the firm at the start of the week. A merger between the two companies would lead to the creation of a new dominant player on the British high street.
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