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LONDON May 15 Britain's Carphone Warehouse
and Dixons Retail have agreed a 3.8 billion
pounds ($6.38 billion) all-share merger, creating a powerful
pan-European mobile phone and electricals group with about 2,900
Carphone, Europe's biggest independent mobile phone
retailer, and Dixons, Europe's No. 2 electricals retailer, said
on Thursday the deal would be implemented by way of a scheme of
arrangement of Dixons.
The merger would result in each of Dixons' and Carphone's
shareholders holding 50 percent of a group to be called Dixons
Carphone Plc, which will likely find a place in Britain's FTSE
100 index of leading companies.
Under the terms of the merger, Dixons shareholders will
receive 0.155 of a new Dixons Carphone share in exchange for
each Dixons share.
Based on Wednesday's closing prices Carphone had a market
capitalisation of 1.90 billion pounds and Dixons 1.87 billion
Carphone and Dixons said on Feb. 24 they were in merger
talks and had been given a May 19 deadline by the Takeover Panel
to agree a deal.
The two firms said they will be able to achieve integrated
mobile retailing and procurement synergies, together with cost
savings, of at least 80 million pounds on a recurring basis
which are expected to be delivered in full in the 2017-18 year.
Charles Dunstone, Carphone's co-founder, chairman and 23.5
percent shareholder, will chair the combined group.
Dixons will take the top two executive roles, with its Chief
Executive Sebastian James and Chief Financial Officer Humphrey
Singer adopting the same roles at the combined group.
Andrew Harrison, Carphone's CEO, will become deputy CEO,
while Roger Taylor, deputy chairman of Carphone, and John Allan,
the Dixons Retail chairman, will both be deputy chairmen.
The rationale for the merger is the increasing convergence
of the smartphone and tablet market with that for electrical
goods such as televisions, with Carphone bringing the expertise
for the former and Dixons the expertise for the latter.
Dixons is currently under exposed to the key area of
mobile/smartphone retailing, while Carphone will likely face
increased pressure from mobile phone networks wanting to be more
reliant on their own direct channels to consumers.
Dixons also released a trading statement on Thursday,
predicting that full-year underlying profit before tax would be
at the top end of market expectations of 150 million pounds to
160 million pounds.
($1 = 0.5960 British Pounds)
(Reporting by James Davey; editing by Kate Holton)