Dixons and Carphone Warehouse are in talks over a possible merger that could make the electrical giant and smartphone retailer one powerhouse high-street chain.

Both boards have confirmed that they are in talks over combining the companies, although at this moment, there is no guarantee that the merger will go ahead.

"The Boards of Dixons and Carphone Warehouse note the recent speculation and confirm that the two companies are in preliminary discussions regarding a possible merger of Dixons and Carphone Warehouse," they said in a collaborated statement.

"These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming."

Sky News claims that, if talks are successful, the chief executive of Dixons Retail, Sebastian James, will be the new head of the supergroup. Both companies have until 24 March to reach an agreement.

In uncertain economic times Dixons - the retail group which also owns a combined 500 Currys and PC World stores in the UK - has seen its share of rises and falls. But since the demise of Comet, the retailer has risen to prominence and fought off strong market rivals through its high-street and online business. 

Allied with Carphone Warehouse, which operates 1,700 stores throughout Europe, 800 of which are in the UK, a merger could mean a rethink of what both companies offer for sale. Dixons mobile contract, anyone?