The owner of PC World and Currys has revealed it is in talks with mobile phone retailer Carphone Warehouse about a potential merger.
Dixons Retail Group said the discussions are at an early stage and that no decisions have been made about how a tie-up might be structured.
Both companies are valued at around £1.8bn on the London stock market, following a rise of 5% for shares in Dixons and 3% for Carphone Warehouse. Carphone was founded in 1989 by Charles Dunstone, who still owns 23% of the company. It has more than 2,000 stores across Europe.
The business was recently boosted by a major deal to open 60 Samsung-branded stores across Europe, including a third on UK high streets. Dixons has more than 500 stores across the UK and Ireland, predominantly in out-of-town retail parks.