Dixons boss set to be chief exec if deal happens
DIXONS Retail chief executive Sebastian James is expected to head one of the high street’s biggest chains if talks with Carphone Warehouse lead to a merger, with Sir Charles Dunstone expected to become chairman.
The two companies yesterday confirmed “very preliminary” merger talks that could create an electricals and mobile phone giant with a market capitalisation of around £3.7bn, based on yesterday’s share prices.
Dixons’ shares rose 6.6 per cent while Carphone Warehouse rose by 8.8 per cent last night as investors welcomed talks of a deal, which would result in the combined group having about 3,000 stores across Europe.
“There is strategic logic in the deal given the way the whole industry is moving and given the convergence in technologies,” Investec analyst Kate Calvert said.
However, she added that there were unlikely to be huge cost-savings from the merger because of the limited overlap between the two retailers’ businesses.
In a statement yesterday the pair said there was no certainty a deal would occur. They added that no decision had been reached regarding the structure of any merger but it is expected to be a merger of equals, with both sides unlikely to settle for anything less.
Talks are understood to have emerged after the pair discussed putting Carphone Warehouse outlets within Dixons’ stores, replacing its current agreement with Phones 4 U.
Dixons chief executive James has also spoken in the past of wanting to step up the company’s exposure to mobile phones.
Dunstone, Carphone Warehouse’s founder and biggest shareholder, is expected to become chairman, with James staying on as chief executive.
Under Takeover Panel rules the firms have until 24 March to make an offer.
ADVISERS
JAMES ARCULUS
DEUTSCHE BANK
James Arculus, managing director for UK mergers and acquisitions at Deutsche Bank, is leading the team at the bank overseeing a merger talks between Carphone Warehouse and Dixons Retail.
Deutsche Bank is a long-standing corporate broker to Carphone Warehouse and is acting on behalf of the phone retailer while Citigroup is understood to be advising Dixons, with Barclays as its corporate broker.
Arculus has been involved in some of the biggest deals on the market in his 19 years at Deutsche and a potential merger between the two retail chains would mark another big coup for the firm.
In 2012 he assisted Smith & Nephew on its expansion into the wound healing market after advising on its £487.5m deal to buy a US company specialising in spray-on treatment for cuts and grazes
Arculus also advised Northern Rock on the bank’s sale to Virgin Money in 2011 as well as Stagecoach’s attempted purchase of National Express in 2009 and HeidelbergCement’s acquisition of Hanson.
Deutsche Bank and Citigroup declined to comment on the merger talks.