UK retailers Dixons and Carphone Warehouse are poised to announce plans for a £3.5 billion ($5.88 billion) merger aimed at addressing new opportunities in the emerging Internet of Things (IoT) space.
According to numerous press reports, the two companies plan to combine their resources to take advantage of new opportunities created by convergence of the consumer electronics and connected-devices markets.
Dixons sells a range of electrical appliances in its high street stores, while Carphone Warehouse is one of the country’s best-known retailers of mobile phones and tablets.
According to the UK’s Financial Times newspaper, the deal would be structured as a 50:50 merger with Carphone Warehouse founder Charles Dunstone becoming chairman of the enlarged group.
Sebastian James, the chief executive of Dixons, would likely remain in his post following the merger, reports the Financial Times.
The tie-up would create a group with a turnover of nearly £12 billion and more than 3,000 stores up and down the country.
In 2013, reports the Guardian newspaper, Dixons made pre-tax profits of £94.5 million on sales of £8.2 billion, while Carphone Warehouse reported a net profit of £59 million on revenues of £3.7 billion.
Analysts cited by the press say the merger would allow the companies to save as much as £100 million in operational costs by closing some of their stores, and would ultimately be well positioned as the IoT market begins to take off.
“A couple of years ago the IoT sounded like science fiction but now it is actually happening,” said Bryan Roberts, an analyst with Kantar Retail, as quoted by the Guardian.
"You can buy an internet enabled washing machines or a fridge that triages your fresh food."