Charles Dunstone has sold a major stake in Carphone Warehouse to American company Best Buy to launch a new joint venture selling electrical goods in Europe.
Carphone has sold a 50% stake in its retail business to Best Buy for just over £1bn in cash in and a 50% stake in the new business venture.
Best Buy will have interests in Carphone’s retail, web, direct business, insurance operations and its airtime reselling business. But the deal does not include its fixed line service Talk Talk, AOL Broadband, Opal and its share in Virgin Mobile France.
The shares in Carphone Warehouse PLC will remain the same. No one is selling shares and no one is taking the money, but the PLC has £1bn more on its balance sheet.
The billion pound cash windfall will be used by Carphone to pay off debts, invest in broadband and customer growth and infrastructure and invest in new areas of growth through acquisitions.
A handful of close industry confidants of Dunstone were last week given hints of the deal, but details were only confirmed today in a stock market announcement.
Last month, influential UK CEO Andrew Harrison took greater control of the Carphone business in readiness to take a major role in the new tie-in.
The splitting out of retail from the broadband and telecom operations was another key move to enable the cash injection.
Charles Dunstone is likely to retain a central role in the new business and will have the key say in using the cash as a war chest for expansion in a tightening market.
Dunstone may use the cash to acquire electronics retailers in line with his vision of the wireless home. He will also consider a bid for broadband company Tiscali, who have been tipped for a takeover by Carphone for some months.
An operator source at director level said: ‘It is a very interesting move. We have all been aware of the Best Buy tie in for some time.
‘It is great that they have finally done the deal. It just shows a level of thinking that other retailers just do not have. They have a lateral thinking approach.
‘In some ways this will take pressure off Carphone’s relationship with the operators because they will see the possibility of margin coming from other areas in mobile.
‘But they will also be concerned about the management changes because so much of the business is about relationship.
‘They will want to know how Best Buy will feature in the management team. Andrew Harrison is going to be very important. A more operational role is probably not what he wanted but it will be in his and Carphone’s longer term interests.’