Carphone Warehouse has refused to comment on claims that a bid to take US retailer Best Buy private could trigger the end of the two companies' joint venture.
Best Buy's former chairman Richard Schulze is offering between $24 and $26 per share for the US retailer, which would value it at $8.5bn. Best Buy set up a European joint venture with Carphone Warehouse in 2008, after Charles Dunstone [pictured] sold a 50% stake to it worth £1.1bn.
However, Exane analyst Ben Spruntulis claimed Dunstone has the option to buy this 50% stake back at a 'fair market value' if Best Buy has a change of ownership. Spruntulis put this value at £440m, meaning Dunstone could net a £660m profit for the partnership.
According to the note, Spruntulis said both Dunstone and Carphone Warehouse Europe CEO Roger Taylor have a 'strong track record of undertaking value-enhancing transactions with Best Buy'. The break clause also allows Dunstone to sell his share of both companies' Global Connect retail business, which could net him £100m. Spruntulis said: 'In our view it is highly likely under this scenario that Carphone would want to take up these options.'
A spokesman for Carphone Warehouse said: 'We never comment on speculation and our relationship with Best Buy remains very strong.'
Spruntulis said he was confident Carphone Warehouse Europe could be bought out without raising equity via a rights issue. A standalone Carphone Warehouse would be strong enough to enter the FTSE 250 index.
Schulze is aiming to contribute $1bn to the takeover bid for Best Buy, according to a letter seen by Bloomberg. The rest of the bid will be funded by private equity and debt financing. Schulze said in the letter: 'That exploration has reinforced my belief that bold and extensive changes are needed for Best Buy to return to market leadership and has led me to the conclusion that the company’s best chance for renewed success will be to implement these changes under a different ownership structure.'
Editor: Graeme Neill