Carphone Warehouse called time on its joint venture with US giant Best Buy yesterday after agreeing a cut-price deal to buy back the firm’s 50 per cent stake.
The mobile phone retailer will pay £471 million in cash and shares to buy out Best Buy, marking the end of a five-year tie-up between the two firms and seeing Best Buy retreat from its costly foray into Europe.
Best Buy – one of the world’s biggest names in electronics retailing – paid £1.1 billion for a 50 per cent stake in the European partnership in 2008, with Carphone spinning off nearly 2,400 stores into the venture under plans to create a consumer electronics empire to take on the likes of Dixons Retail.
But the scheme proved overly ambitious, with Carphone closing the 11 “big box” shops it opened in conjunction with Best Buy in 2011 after failing to make headway in a tough consumer market amid the financial crisis and recession.
Carphone also exited its US partnership with Best Buy in 2011, selling back its stake for more than £830m, which Carphone boss Roger Taylor said left both groups focusing on operations in their respective domestic markets.
“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,” he added.
Carphone will fund £80m of the deal through an investor cash call, by placing more than 47 million shares at 190p each, representing 10 per cent of the phone retailer’s existing share capital.
The group also confirmed plans to pull out of France in a move that will impact some 1,100 staff employed across 250 stores.