19th May 2014 07:16
LONDON (Alliance News) - Dixons Retail PLC, the electronics retailer which agreed to merge with mobile phone retailer Carphone Warehouse Group PLC last week, said Monday that it is selling off its ElectroWorld business in central Europe.
The group said it is selling the loss-making business to NAY AS, an electrical specialist retailer which operates in the Slovak market, and said it expects to receive a small deferred cash consideration for Electroworld, which operates 26 retail stores across Czech Republic and Slovakia.
The announcement comes just a few days after its new partner Carphone Warehouse said that it has entered exclusive talks to sell its joint venture with Virgin Media Inc, Virgin Mobile France, to Numericable Group SA for EUR325 million.
"Following this transaction Dixons will be a market leader in every market in which it operates, delivering on one of our key strategic objectives," said Chief Executive Sebastian James in a statement.
Last week, Dixons Retail and Carphone Warehouse said they had agreed to merge in a GBP3.6 billion deal that will create the UK's biggest retailer of mobile phones and electrical goods. The new enlarged entity is to be called Dixons Carphone PLC.
The companies said the aim of the deal is to cut the number of stores by amalgamating their electrical and phone stores into a joint offering, and to home in on the growing trend of connected devices, as smartphones become increasingly used to control everything from thermostats at home, to lighting and streaming music across homes. The companies also aim to roll-out the biggest click-and-collect network for technology products across the UK.
The disposal of ElectroWorld marks the latest asset sale by Dixons, having already shed loss-making businesses such as Pixmania in France, Electroworld in Turkey and Unieuro in Italy.
Dixons Retail has spent several years turning itself around after over-expanding and then being hit hard by expanding online competition and the economic crisis. By shedding loss-making assets, the group has managed to bring down costs within the business, helping it to slash costs, and bringing down the price of its own goods closer to those of e-tailers like Amazon. It has also improved its own online platform.
Just a day after the companies confirmed the merger, Carphone Warehouse said it had entered into exclusive talks to sell its joint venture with Virgin Media Inc, Virgin Mobile France, to Numericable Group, a French telecommunications and broadband services provider.
Carphone currently holds a 46% share in the Omer Telecom Ltd joint venture with Virgin Media that owns Virgin Mobile France. The joint venture has been hampered by competition in the French market, and in Carphone's fourth quarter it saw its revenue drop 8.6% as its contract customer base continued to decline. Any deal would be subject to approval from the French Competition Authority, it said.
Dixons Retail said Monday that it expects to receive a small deferred cash consideration spread over three years from the disposal of Electroworld. The deal is subject to certain normal conditions including competition authority clearance, it said, and is expected to be completed during the summer.
For the year ended April 2014, Electroworld recorded a pretax loss of GBP5.6 million, on revenues of GBP129 million.
Shares in Dixons Retail were 2.7% higher Monday shortly after the open, at 45.20 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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