Dixons and Carphone win extension for merger talks

"Discussions are still ongoing and there can be no certainty that a firm offer will be made," the companies said.

A combination of the retailers would create an electrical retailer spanning white goods, tablet computers, and mobile phones.

It is thought that the companies have agreed that Sir Charles Dunstone, the founder and chairman of Carphone Warehouse, would chair the new company, while Sebastian James, boss of Dixons Retail, would be chief executive.

However, the high street retailers need to agree how the tie-up would work, with Sir Charles understood to be insistent that the deal is a “merger of equals”.

At Friday’s closing share prices, Dixons was worth £1.8bn and Carphone Warehouse £1.95bn. However, Dixons’ shares have rallied by 75pc since the start of 2013 as the retailer has benefited from the demise of its nearest rival, Comet, the popularity of tablet computers, and its strategy of taking on Amazon through deals with suppliers to sell products exclusively.

Shares in both companies have risen since the merger talks were revealed as investors have given early backing to the tie-up. However, Dixons and Carphone Warehouse said in their statement that talks were at a “very preliminary” stage.

The combined business would have more than 1,200 UK shops, meaning it could be investigated by competition authorities.

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