UK

Best Buy Agrees to Buy Carphone’s Mobile Venture, Will Shut Stores in U.K.

Q  Nov 7, 2011 9:38 AM ET

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Best Buy said today it will pay 838 million pounds for the 50 percent stake in the venture. Photographer: Andrew Harrer/Bloomberg

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Best Buy Chief Executive Officer Brian Dunn. Photographer: Ronda Churchill/Bloomberg

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Shoppers carry their purchases from a Best Buy Store in Thurrock. Source: Getty Images for Best Buy

Best Buy Co., the world’s largest consumer-electronics retailer, agreed to buy Carphone Warehouse Group Plc (CPW)’s stake in their U.S. mobile-phone joint venture for 838 million pounds ($1.34 billion) and close the U.K. stores it opened less than two years ago.
The cash transaction for the 50 percent stake in the venture, which was formed in 2006, is expected to add to earnings in fiscal 2013, excluding items, Minneapolis-based Best Buy said today in a statement. Carphone Warehouse will return almost all of the proceeds to shareholders, according to a separate statement.
Best Buy Chief Executive Officer Brian Dunn is betting on mobile phones in the U.S., where slumping television sales and competition from Amazon.com Inc. (AMZN) have led to five straight quarterly declines at stores open at least 14 months. The 11 “big box” stores that are being closed in the U.K. have been pinched by a decline in consumer spending.
“The investment community has wanted to see Best Buy take full control of the U.S. mobile business where there’s still strength at least for the near term,” Joe Feldman, an analyst at Telsey Advisory Group in New York, said in a telephone interview yesterday. “Closing the U.K. stores signals the highly competitive market and the tough economic environment.”
Best Buy rose 0.4 percent to $27.42 at 9:33 a.m. in New York. Carphone Warehouse advanced 1.2 percent to 349 pence in London trading.

Mindshift Acquisition

Best Buy will incur expenses of about $2.6 billion, including $1.2 billion to write down Best Buy Europe’s goodwill. Excluding restructuring charges and other items, the deal will boost profit by about 5 cents a share in the fourth quarter of fiscal 2012.
Separately today, Best Buy agreed to buy mindSHIFT Technologies Inc., a provider of information technology services to small and medium-sized businesses, for $167 million, according to a statement.