Carphone Warehouse Group has reached an agreement to merge with Dixons Retail, owner of Currys and PC World, in a deal worth £3.8bn.

Each firm will take a 50 per cent share in the newly formed company, to be named Dixons Carphone.

The merger is expected to save Dixons Carphone £80m annually, which should be first achieved in the financial year 2017/18.

Sebastian James, currently CEO of Dixons, will become CEO of the combined company, while Carphone CEO Andrew Harrison will be deputy CEO.

“We are incredibly excited about the opportunity today’s news brings to our organisations, our consumers and our investors,” said Sir Charles Dunstone, who will be chairman of Dixons Carphone. “Both Carphone and Dixons have a huge commitment to delivering the consumer the very best service, product and advice around the connected world. 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.”