Carphone and Dixons talks extended

File photo dated 22/01/13 of a general view of a branch of the Carphone Warehouse in London as the owner of PC World and Currys has revealed it is in talks with the mobile phone retailer about a potential merger. PRESS ASSOCIATION Photo. Issue date: Monday February 24, 2014. Dixons Retail Group said the discussions are at an early stage and that no decisions have been made about how a tie-up might be structured. See PA story CITY Dixons. Photo credit should read: Philip Toscano/PA Wire

%VIRTUAL-SkimlinksPromo%Dixons Retail and Carphone Warehouse have been given more time to discuss a potential £4 billion merger plan.

A deadline for the two companies to announce their intentions by today has been extended to May 19, the pair said in a statement.
Details of the possible merger between electrical retailer Dixons, owner of PC World and Currys, and mobile phone retail giant Carphone Warehouse were revealed last month, sending shares in both companies soaring.

But both stocks fell today as it transpired that the initial deadline of 5pm today would not be met. Carphone Warehouse is valued at about £1.9 billion and Dixons at £1.8 billion.

The high street retailers said that the announcement of talks on February 24 was made "when discussions were at a very preliminary stage".

It added: "Both parties have agreed that they require more time to evaluate a potential merger of the two businesses."

The statement said that an extension had been granted by the Takeover Panel. It said discussions were ongoing but there was no certainty a firm offer would be made.

Between them, the two companies have more than 3,000 stores with annual sales of more than £12 billion.

Dixons, founded in the 1930s and based in Hemel Hempstead, Herts, is one of the largest consumer electronics retailers in Europe, employing more than 31,000 people in 12 countries.

Carphone Warehouse was founded in 1989 by Sir Charles Dunstone, who still owns 23% of the company.

Both companies have weathered the difficult trading conditions in UK retail, with Dixons recently reporting its second year in a row of improved Christmas trading as it benefits from the demise of rival Comet.

Carphone recently said like-for-like revenues rose 5% in the UK during the quarter to December 28 as its performance was boosted by the popularity of more expensive smartphones.

Sir Charles is reportedly in line to become chairman of the newly-merged company with the chief executive's role to be taken by Dixons boss Sebastian James.

However, the companies still need to agree how the tie-up would work, according to the Sunday Telegraph, with Sir Charles said to be insisting that it is a "merger of equals".

High Street casualties
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Carphone and Dixons talks extended

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.


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