LONDON (The Deal) -- The U.K.'s Carphone Warehouse Group and Dixons Retail on Thursday, May 15, confirmed a 50/50 merger to create a new phone and appliances retailer with a market value of about 3.75 billion pounds ($6.28 billion)
As expected Carphone Warehouse will acquire Dixons Retail through an all-share scheme of arrangement . The London company will issue 0.155 of a new Dixons Carphone plc share in exchange for each Dixons' share, paying 1.86 pounds billion in total for the equity.
Based on Wednesday's closing price for Carphone Warehouse, the price is 0.2% below its Hemel Hempstead, England merger partner's 50.90 pence closing price.
The merger is the culmination of at least three months of discussions and will unite Dixons' 900 European stores, including the Dixons and PC World chains in the U.K., with 2,000 Carphone Warehouse outlets across the continent, plus its 46% stake in Virgin Mobile France.
The companies said they've identified cost savings of 80 million pounds from the fusion. Those savings will kick in in full in the fiscal year ending 2018, with about half of them achievable two fiscal years earlier, the companies said.
The management team will be drawn from both sides, as expected, with Carphone founder and Chairman Charles Dunstone staying in that role, Dixons CEO Sebastian James becoming CEO, and Carphone CEO Andrew Harrison taking the deputy CEO position.
The fusion needs approval from both sets of shareholders and from the High Court. Carphone Warehouse already has the support of shareholders owning 26.7% of the equity, primarily Dunstone, who holds about 24% of the company he founded.