It has been revealed today that Dixon’s and Carphone Warehouse are in talks over a possible merger.  There’s a lot of logic to this deal. It would be a merger of market leaders and would give Dixons unparalleled expertise in the one area of electronics that it has no experience in – mobile phones. It would also give it a stronger partner than Phones 4U which currently operates as a concessionaire in many Dixons stores.

It would give Carphone Warehouse expertise in electronics which it lacks. Its newer stores with an emphasis on all mobile technology lack the authority of the latest Currys PC World High street stores. So both sides have much to gain.

But it also raises questions…

Such as “are the days of the specialist mobile phone shop now over, in the way that the days of the independent PC shop seem to be finished?”. This may look at first sight like a merger of equals, but we suspect that CPW needs this deal more than Dixons does. After all, Dixons has spent the last 30 years running down its high street estate. Even so, on the right terms this deal would make a lot of sense for both sides. The one major uncertainty would be over whether the OFT would be prepared to see the merger between the two major forces in their respective markets.