O2 said to be close to acquiring The Link chain |
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Mon, 19 Jun 2006 09:20
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LONDON - UK's biggest electrical retailer DSG International is heavily tipped to sell The Link chain to mobile phone group O2, which was brought by Spain's Telefonica, according to a report in the Guardian newspaper. An announcement to this effect could be made this week.
The Link chain, which has 300 shops, has been struggling for quite sometime in the face of stiff competition from rivals like Carphone Warehouse. Its bottom line has also been affected by the intense competition from supermarkets. The Link had sales of £428 million last year, but there was a 25 percent dip in like-for-like sales, prompting chief executive, John Clare, to call it "disappointing". He added that he was pretty keen to sell the business, which was established in 1995 by the then chairman of Dixons, Sir Stanley Kalms.
The DSG group is to unveil its full-year results this week and any deal with O2 could also be revealed at the same time. Mr Clare was deterred from selling The Link because of the fact that O2 owns 40 percent stake in it courtesy its acquisition when it demerged from BT more than four years ago. He had changed the management at The Link last autumn, but had admitted that it was not central to the group.
Clare also said he would consider offers for the group. DSG had attempted to get complete control over the group, but was rebuffed by O2. The change of plans in O2 could be due to the fact that it promised to move into the residential telephony market after Orange and Vodafone also stepped up their efforts at offering a broadband service.
If the takeover goes ahead it will be O2's first major buy since being Spain's Telefonica last year for £17 billion.
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