Dixons/Carphone merger may set AMV against CHI

It would be interesting to know how much Dixons’ and Carphone Warehouse’s respective agencies – AMV/BBDO and CHI & Partners – knew about the two companies’ proposed £4bn merger.

The two are expected to announce the terms this week which will, almost certainly, be followed by a referral to the Competitions and Markets Authority.

On the face of it there’s no particular need to change the agency set-up – but all such deals are about cost savings as much as anything else and one agency is cheaper than two.

Carphome, headed by co-founder Charles Dunstone (left), was CHI’s founding client back in the day and Dunstone and CHI CEO Johnny Hornby are pals (Hornby borrows Dunstone’s yacht for Cannes). So it would be odd if Hornby didn’t know what was coming.

AMV was only only recently appointed by Dixons, which left M&C Saatchi after decades.

Dixons brands include Currys and PC World and the obvious attraction of the deal from their point of view is a bigger presence in mobile. Dunstone has always been interested in getting into bigger electricals and he seems undeterred by a failed bid to enter the UK market in partnership with US giant Best Buy.

Between them Dixons and Carphone Warehouse (which also owns TalkTalk) spend close to £100m on advertising. If the accounts are consolidated AMV looks in the best position as CHI also handles Argos, a competitor to Dixons.