Best Buy said it would buy out Carphone Warehouse Group Plc from a profit share of their Best Buy Mobile venture in the United States and Canada, which has been benefiting from soaring demand for smartphones like Apple's iPhone. "For Best Buy to be able to no longer have to share 50 percent of the profits of a high-margin, fast-growing business with Carphone Warehouse, from my perspective, is a real positive," said BB&T Capital Markets analyst Anthony Chukumba.
At 1350 GMT, Carphone shares were up 1 percent at 348.25 pence, outperforming a 1.1 percent fall in the STOXX Europe 600 European retail index . Best Buy said taking full control of Best Buy Mobile and closing British megastores would add 35-40 cents to fiscal 2013 earnings. UK OUT, EMERGING MARKETS IN Best Buy bought 50 percent of Carphone's retail operations for about $2.1 billion in 2008 to tap the British firm's expertise in mobile phones and to act as a springboard for expansion across Europe.
Best Buy and Carphone said they would close their 11 Best Buy-branded stores in Britain at a cost of about 65-75 million pounds, but expected to redeploy most of the 1,000 or so staff. Best Buy, which is shrinking its U.S. megastores in the face of stiff competition and weak consumer demand, said it would focus in Europe on Carphone's existing smaller format stores -- their Best Buy Europe business.
The two also unveiled a venture aimed at replicating Best Buy Mobile's success in emerging markets.
The initial focus would be China, where Global Connect plans to introduce outlets into the 200 or so stores of Best Buy's local partner Five Star. Standalone stores could follow, Taylor told Reuters in a telephone interview. Best Buy and Carphone also formalised their relationship over Best Buy Europe, saying Best Buy would have the right to buy Carphone's 50 percent stake from March 2015 and that, if it did not do so, Carphone would have the right to buy Best Buy's stake at a 10 percent discount to fair market value.
British mobile retailer Carphone Warehouse will shutter the 11 Best Buy stores it opened in the U.K. less than two years ago. Formed in 2006, Best Buy Europe is a 50/50 joint venture between Carphone Warehouse and Best Buy. Best Buy will also buy out Carphone Warehouse's stake in the venture. Bloomberg reported that Best Buy will pay 838 million pounds ($1.34 billion) for Carphone Warehouse's share.
Best Buy Europe operates 2,453 Carphone Warehouse and Phone House stores across nine countries in Europe. U.S. Best Buy said it would buy out Carphone Warehouse Group from a profit share of their Best Buy Mobile venture in the United States and Canada, which has been benefiting from soaring demand for smartphones like Apple's iPhone. Best Buy Co., the world's largest consumer-electronics retailer, plans to buy Carphone Warehouse Group Plc's stake in their U.S. mobile-phone joint venture and close the U.K. stores it opened less than two years ago. Carphone Warehouse rose as much as 11 percent in London trading, the most since Nov. 5, 2010, and was up 1.1 percent at 349 pence as of 11:24 a.m. Best Buy advanced 1.1 percent to $27.31 in New York on Nov. 4. The unit has dedicated areas inside all Best Buy's 1,106 U.S. large-format outlets, and 247 smaller standalone stores. The venture's 5 percent market share compares with 1 percent when it started, Carphone Warehouse said in June.
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