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LONDON, May 15 (Reuters) - Britain's Carphone Warehouse and Dixons Retail have agreed a 3.8 billionpounds ($6.38 billion) all-share merger, creating a powerfulpan-European mobile phone and electricals group with about 2,900stores.
Carphone, Europe's biggest independent mobile phoneretailer, and Dixons, Europe's No. 2 electricals retailer, saidon Thursday the deal would be implemented by way of a scheme ofarrangement of Dixons.
The merger would result in each of Dixons' and Carphone'sshareholders holding 50 percent of a group to be called DixonsCarphone Plc, which will likely find a place in Britain's FTSE100 index of leading companies.
Under the terms of the merger, Dixons shareholders willreceive 0.155 of a new Dixons Carphone share in exchange foreach Dixons share.
Based on Wednesday's closing prices Carphone had a marketcapitalisation of 1.90 billion pounds and Dixons 1.87 billionpounds.
Carphone and Dixons said on Feb. 24 they were in mergertalks and had been given a May 19 deadline by the Takeover Panelto agree a deal.
The two firms said they will be able to achieve integratedmobile retailing and procurement synergies, together with costsavings, of at least 80 million pounds on a recurring basiswhich are expected to be delivered in full in the 2017-18 year.
Charles Dunstone, Carphone's co-founder, chairman and 23.5percent shareholder, will chair the combined group.
Dixons will take the top two executive roles, with its ChiefExecutive Sebastian James and Chief Financial Officer HumphreySinger adopting the same roles at the combined group.
Andrew Harrison, Carphone's CEO, will become deputy CEO,while Roger Taylor, deputy chairman of Carphone, and John Allan,the Dixons Retail chairman, will both be deputy chairmen.
The rationale for the merger is the increasing convergenceof the smartphone and tablet market with that for electricalgoods such as televisions, with Carphone bringing the expertisefor the former and Dixons the expertise for the latter.
Dixons is currently under exposed to the key area ofmobile/smartphone retailing, while Carphone will likely faceincreased pressure from mobile phone networks wanting to be morereliant on their own direct channels to consumers.
Dixons also released a trading statement on Thursday,predicting that full-year underlying profit before tax would beat the top end of market expectations of 150 million pounds to160 million pounds.
($1 = 0.5960 British Pounds) (Reporting by James Davey; editing by Kate Holton)
