Dixons and Carphone Warehouse plan merger

<p>The two firms saw their stocks rise on the back of the news.</p>

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.

Company statement

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.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.