Dixons has completed a deal to merge its loss-making Italian business with local player Marco Polo.

Dixon’s UniEuro business will merge with Marco Polo, a multichannel electrical specialist with 79 stores owned by private equity group Rhone Capital.

Talks over the merger were first revealed in October and the deal completed today.

Dixons will provide the merged business with €25m of cash and invest up to €10m in it in the form of a loan note.

The Currys and PC World owner will own a 15% share of the new company while Rhone Capital will hold 85%.

The new retail group will trade from 173 company owned stores and a number of franchise shops.

Dixons has faced difficulty in building scale in the country against a plethora of local players.

Dixons group chief executive Sebastian James said: “I’m delighted to have completed this deal, ensuring a sustainable future for both businesses. The combined group has an exciting outlook and I know that it will continue to flourish with an improved geographical spread of stores across Italy.

“For Dixons, this is the second of three important strategic transactions streamlining our group.  By focusing on markets where we have leading multi-channel operations, we will be able to drive even better value for our customers.”

Marco Polo chief executive Giancarlo Nicosanti Monterastelli said: “This transaction is the first stage of a long-term plan to create a leading integrated multichannel retail group in the Italian electrical market and we are confident that we can now offer improved benefits for customers and suppliers. 

“The complementary channel strategy and store portfolios of the two companies will enable the combined group to attract more customers across Italy and achieve long-term growth.”