London - Britain's Carphone Warehouse and Dixons Retail have agreed £3.8bn all-share merger, seeking to tap into the increasing convergence of smartphones and consumer electronics products in people's lives.
Combining Carphone, Europe's biggest independent mobile phone retailer, and Dixons, Europe's No 2 electricals retailer, would create a group with turnover of about £12bn, 2 900 stores and 45 000 employees, the companies said on Thursday.
Retailing
"We operate in two complementary markets (mobile phones and consumer electronics) but they are markets that are converging," said Carphone's chief executive, Andrew Harrison.
Consumers want increasingly to connect their smartphones and household devices such as music players and televisions or home appliances like ovens, heating systems and washing machines.
Dixons lacks exposure to lucrative mobile and smartphone retailing.
Carphone is likely to face increased pressure from mobile phone networks wanting to be more reliant on their own direct channels to consumers.
Shareholders
Carphone and Dixons said in February that they were in merger talks and had been given a 19 May deadline by Britain's Takeover Panel to agree to a deal.
They came up with a structure that would split ownership of the new company 50-50 between existing Dixons and Carphone shareholders.
Dixons shareholders would receive 0.155 of a new Dixons Carphone share in exchange for each Dixons share and based on Wednesday's closing prices, Carphone had a market value of £1.9bn and Dixons £1.87bn.
Dixons Carphone is likely to enter Britain's FTSE 100 index of leading stocks.
Shares in Dixons were down 5.6%, while Carphone's were down 3.7% early on Thursday.
Shares in both companies have gained since they announced the tie-up talks.