Carphone Warehouse Europe to buy out Best Buy stake

Carphone Warehouse Europe to buy out Best Buy stake

Carphone Warehouse Europe is taking full control of its business, buying out Best Buy's 50% joint venture stake in a deal worth £471m.

The retailer said by taking the company back, it would streamline the ownership structure and make day to day management and decision making easier. It said it was keen on maximising growth opportunities across Europe and other markets. The deal could also mark Carphone Warehouse's eventual return to the FTSE 100.

The buyout ends a five year trans-Atlantic relationship that never quite got off the ground, although Carphone Warehouse will emerge from it in a better financial position than before. Best Buy spent $2.15bn (£1.39bn) back in 2008 to buy into Carphone Warehouse Europe, setting up big box style stores across Europe. However, it shelved these plans in late 2011 and began unravelling the joint venture, splashing out $1.3bn (£838.9m) to Carphone Warehouse for its share in its US business.

To pay for the share, Carphone Warehouse Europe will pay £341m in cash when the sale completes in June 2013 and issue Best Buy with £80m in shares. An additional £50m will be paid across the first and second anniversaries of the sale's completion.

Roger Taylor, CEO of Carphone Warehouse Europe, said: ''Carphone Warehouse and Best Buy have enjoyed a great relationship over the last five years ensuring that we shared and enjoyed many aspects of each other's business attributes. However, following the sale of our US interest last year, we have become increasingly responsible for the day-to-day operations of CPW Europe whilst conversely Best Buy have become more focused on their wholly-owned businesses. As a result, both parties have agreed that this is a good time for us to bring the joint venture to an end, whilst ensuring that our relationship remains in place by way of our global buying alliance.

'For us, the transaction will simplify our ownership structure, streamline management decision- making and give us full ownership of our growth opportunities across Europe and other markets around the world. In view of this, our Global Connect relationship and our joint venture in China and Mexico will also come to an end and this will enable both parties to focus on opportunities at their own pace and in their own preferred geographies. We expect the transaction to be earnings enhancing in the current financial year, and in due course, we intend to apply for a premium listing and FTSE index inclusion.'

The deal follows an extensive restructure in its UK business. Managing director Matt Stringer left the company, with CEO Andrew Harrison taking more of a hands-on role. The retailer reshuffled its buying teams, with decisions being made according to specific groups of customers.

Author: Graeme Neill

Written by Mobile Today
Mobile Today


The board have played an absolute blinder, to buy back the stake for less than 500 million pounds whilst getting over 2 billion pounds in return from ...
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