Carphone Warehouse seals billion dollar deal with Best Buy

 

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Posted on 8 May 2008 at 17:39

The Carphone Warehouse has inked a deal with Best Buy, which will see the US retailer take a 50% interest in its retail business in return for $1.1 billion.

Under the terms of the deal, the structure of Carphone Warehouse itself will be maintained with a new joint venture created to run its 2,400 shops, as well as web sales. The joint venture will be overseen by a six person board, with three Carphone Warehouse members and three Best Buy members.

Carphone Warehouse will maintain sole control of its fixed line and broadband business, comprising TalkTalk, AOL broadband and Opal. Carphone Warehouse intends to use the cash to pay off its existing debts and bolster its broadband offering, which could see it make an offer on the UK operations of Tiscali, which has recently been put up for sale.

BestBuy is the largest retailer of electronics in the US, and is currently valued at around $20 billion and is apparently keen to expand the remit of Carphone Warehouse stores, so that they sell a wide variety of electronics from phones to laptops.

The US company already owns a 3% stake in Carphone Warehouse, which was used to fund a number of joint ventures, most notably its tech support service the Geek Squad.

The deal means Best Buy has the foothold in the European market it had long coveted, however, the company was keen to voice the dangers.

"We've been successful with our business model and aspire to apply that model to one of the largest markets in the world, but we must do it carefully," notes Bob Willett, Chief executive officer of Best Buy International.

"We've seen great companies fail because they thought they could export their current business model to new geographies. We intend to plan our European entry strategy carefully and with on-the-ground help from The Carphone Warehouse."

Author: Stuart Turton