Dixons and Carphone Warehouse merge in anticipation of Internet of Things boom

Deal worth £3.8bn sees two firms merge to become Dixons Carphone

Technology superstores Dixons Retail Plc and Carphone Warehouse are to merge in a deal worth £3.8bn.

The move will see Dixons, the UK's biggest consumer electronics retailer and owner of household appliance store Currys and computer seller PC World, join forces with one of the country's leading outlets for selling mobile devices, smartphones and tablets. The new firm will be known as Dixons Carphone.

The two companies each have thousands of employees, with Dixons currently operating over 500 Currys and PC World shops, while Carphone Warehouse has more than 2,000 stores across Europe. Carphone Warehouse expects the move to create jobs at the firm, while it is anticipated that a small percentage of Dixons staff may lose theirs as part of the restructuring.

Dixons announced the merger in its financial report for 2014, which saw pre-tax profits of £150m and sales up three per cent year-on-year.

"Today we also announce that we are setting out on a new journey with Carphone Warehouse and it is good to be in such a strong position as we embark on this adventure," said Sebastian James, chief executive of Dixons, who argued that the deal would help make lives better.

"The ability to take what we have built in electrical retailing and add the profound expertise of Carphone Warehouse in connectivity would make us a leading force in retailing for a connected world.

"Together, we can create a seamless experience for our customers that will enable technology to deliver what it promises - that is, to make their lives better."

Speaking to BBC Radio 4's Today programme, James said the aim of the merger was to exploit the opportunities provided by the ever-increasing number of devices - even household appliances - which are connected to the internet, essentially bringing the devices and those who connect them to the web under the same roof.

"This is a very rare thing, a merger which is based on what is happening out in the world, rather than internal navel-gazing," James said.

The outlook is seemingly shared by analysts, who generally agree that the merger represents a sound move.

"Technological, demographic, consumer and retail trends are all shifting in such a way that the combined entity will be superbly positioned to benefit from current and future demands of the connected consumer," Bryan Roberts, analyst at Kantar Retail, told Bloomberg.

"This isn't a land-grab, or a marriage of convenience, but a sound move based on uniting different strengths."