British electrical goods specialist Dixons Retail and mobile phone retailer Carphone Warehouse have agreed to merge, the pair announced on Thursday.
"The boards of Carphone Warehouse Group plc and Dixons Retail plc are pleased to announce that they have reached agreement on the terms of a recommended all-share merger of Carphone and Dixons," the two companies said in a joint statement.
They added: "The merged entity, to be called Dixons Carphone plc, will create a leader in European consumer electricals, mobiles, connectivity and related services.
"The boards of Carphone and Dixons believe that the merger will deliver significant value to shareholders through a combination of enhanced commercial opportunities and operating synergies."
The pair had already revealed in February that they were holding preliminary talks regarding a possible merger.
The two companies are together worth about £3.7 billion ($6.2 billion, 4.5 billion euros) on the London stock market, and would have combined revenues of more than £12 billion.
Dixons Retail Group has more than 900 shops across Europe, including brands Currys and PC World in Britain and Ireland.
Carphone Warehouse meanwhile has 2,000 stores in Europe, and also holds a 46-percent stake in operator Virgin Mobile France.
The two groups added on Thursday that the merger deal will create a "new, world class British retailer for the new digital age".