Dixons seeks "Darty style" deal for its Italian problem

By James Davey

BLUEWATER, England, Sept 13 (Reuters) - Dixons Retail (Other OTC: DSITY - news) , Europe's second-biggest electrical goods retailer, said on Friday it wanted to merge its loss-making UniEuro business in Italy in a deal similar in structure to one completed by rival Darty in March.

Darty, Europe's No. 3 electricals player, did a deal with Italian electricals retailer DPS Group, co-owner of the Trony brand name, in which it handed over 20 stores plus cash of 3 million euros for a 15 percent share of DPS's share capital.

Dixons' plan is to focus on markets where it has a leading position and combined stores and internet business, such as the UK, Nordics and Greece.

Last week it struck deals to sell its loss-making e-commerce business PIXmania and Turkey's ElectroWorld, leaving Italy as its remaining headache.

"The Darty deal is interesting and if we ended up doing something like that, that would be a success I think," Dixons chief executive Sebastian James said.

"My real goal is to make sure that UniEuro and all of its structure and people are successful. If we can keep a bit of the upside of that, that would be better."

He said UniEuro was too small to succeed in the long term.

"In the long run for UniEuro to be a success it needs to team up with a friend," said James, adding: "There's one clear friend that it ought to be."

He declined to identify the possible partner, though he confirmed it was not the Trony buying group.

The two largest electrical buying groups in Italy are Euronics and Expert.

Dixons is home to the Currys and PC World chains in Britain, Elkjop in Nordic countries and Kotsovolos in Greece.

James was speaking at a relaunch of Dixons' Currys/PC World in the Bluewater shopping mall in Kent, south east England - designed to attract more younger consumers and women.

Last week Dixons posted a 2 percent rise in first quarter underlying sales.

Shares in the company, which have more than doubled over the past year, closed Friday at 47 pence, valuing the business at 1.72 billion pounds ($2.73 billion).