Dixons Retail and Carphone Warehouse have confirmed they are in preliminary discussions over a possible merger.

The pair said in a statement: "These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming. 

"No decision has been reached regarding the structuring of any such merger. Accordingly until further notice, for the purposes of the Code, both Dixons and Carphone Warehouse will be treated as offeree companies."

The statement added that Dixons and Carphone Warehouse are required to either announce a firm intention to make an offer by 5pm on March 24th 2014, or to announce that either do not intend to make such an offer.

Dixons owns the Currys and PC World tech retail brands, with over 500 stores in the UK, while smartphone and tablet specialist Carphone Warehouse has 794 stores.

UPDATE (May 16th 2014):Dixons Retail and Carphone Warehouse confirm they will merge in a £3.8 billion deal.

Read our blog on why the merger could be a win-win for both parties.