24th Mar 2014 10:23
LONDON (Alliance News) - Electronics retailer Dixons Retail PLC and mobile phone retailer Carphone Warehouse Group PLC said Monday that the Takeover Panel deadline for a possible merger has been extended to May 19.
Shares in Dixons Retail and Carphone Warehouse shot higher on February 24 after they confirmed they were in merger talks, but said at the time that the talks are at a very preliminary stage and there was no certainty a deal would be done.
An original deadline to the merger talks had been set for Monday. However Monday morning, the companies said they have agreed that they require more time to evaluate a potential merger of the two businesses. The deadline has now been extended to May 19.
Shares in Dixon Retail were down 1.1% at 49.34 pence per share Monday morning, while Carphone Warehouse shares were trading 3.7% lower at 326.60 pence.
Dixons and Carphone Warehouse are of almost equal size, each with a market capitalisation of about GBP1.8 billion.
Both companies have been performing relatively well in a UK retail market characterised by tough competition, particularly from online commerce, and still cautious British consumers, who have seen average wages decline in real terms since the financial crisis.
Dixons Retail was lifted by the failure of UK rival Comet, which went into administration at the end of 2012. It has also continued to restructure, shedding loss-making businesses such as Pixmania in France, Electroworld in Turkey and Unieuro in Italy. Dixons has reacted to the challenge of online competitors by slashing costs, and bringing down the costs of its own goods, while also improving its own online platform.
Carphone Warehouse, meanwhile, did well out of a deal it struck with Best Buy. The US electronics retailing giant paid Carphone GBP1.1 billion for a 50% stake in the British company's retail unit as they set up a joint venture. However, Best Buy beat a humiliating retreat from Europe just five years later, selling back the stake to Carphone for less than half the initial investment.
Carphone then decided to shutter the joint venture stores they'd opened, focusing instead on selling more electronics goods from its phone stores.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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