One of America’s leading technology retailers Best Buy has revealed that it plans to sell off its 50pc stake in Best Buy Europe to Carphone Warehouse for an estimated stg£500m in cash and stock.
The deal consists of stg£420m in cash and stg£80m worth of shares. A further stg£29m will also be paid to satisfy obligations under existing agreements, including the companies’ Global Connect partnership.
The sale, approved by the boards of both companies, is expected to close at the end of June.
Best Buy says it expects to record an impairment charge of US$200m that will be written off when the sale concludes.
Best Buy Europe revenues had been expected to be in the range of US$5.5bn to US$5.6bn.
The US retail giant entered into the joint venture with Carphone Warehouse in 2008 and the venture had retail outlets in eight countries.
Plans to launch a series of Best Buy retail outlets in Ireland never materialised, however, Best Buy’s Geek Squads were introduced at various Carphone Warehouse outlets in the country.
“After reviewing the business and spending time with our partners, we concluded that the timing and economics were right to enter into this agreement with CPW,” said Hubert Joly, president and chief executive officer of Best Buy.
“This transaction allows us to 1) simplify our business; 2) substantially improve our Return on Invested Capital, one of the five pillars of our Renew Blue transformation; and 3) strengthen our balance sheet,” added Joly.
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