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May 2014 seems to be going down as the month of mergers. As the Pfizer/AstraZeneca saga rumbles on, Dixons and Carphone Warehouse have stepped up to announce that they have agreed a “merger of equals.” Subject to shareholder approval, according the Reuters the merger will see the new Dixons Carphone company leap into the FTSE 100.
The idea behind the merger appears to be that it will enable the new company to lead the way in respect of “the internet of things.” With people increasingly looking for their smart phones to connect with their household appliances, the merger, according to Dixons chief executive Sebastian James, will enable the new organisation to “ create a seamless experience for our customers that will enable technology to deliver what it promises – that is, to make their lives better.”
There has been a mixed reaction to the announcement. Whilst many analysts echo the comment in the Independent that the two companies “share a central ideology in getting people into shops, to offer them good service amid fierce online competition” there has also been some concern expressed about the history of mergers between retail giants; particularly when it comes to the cultural aspects of mergers.
Working towards cultural fit can make or break a merger and when it is something as public as a retail chain which owes much to its brand, cultural fit and customer focus are particularly important. Commenting on this, Carphone chairman Sir Charles Dunstone said “We have a deep respect for each other and we see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age.”