Best Buy, Carphone Warehouse team in $2.14B Euro expansion

Best Buy Co. Inc. is stepping up its European cellphone business to the tune of $2.14 billion.
The big-box U.S. retailer said it will acquire a 50% stake in The Carphone Warehouse Group plc’s mobile retail operations, creating a joint project that will launch Best Buy’s brand across the Atlantic. The new company will operate more than 2,400 stores in nine European countries under both companies’ brands as well as Carphone Warehouse’s mobile virtual network operator service everywhere except France.
Best Buy will continue to hold its 2.9% stake in Carphone Warehouse, and the U.K.-based retailer will maintain its fixed-line telecom business. The companies said they hope to expand Carphone Warehouse’s existing European footprint, rolling out new stores under Best Buy’s name beginning next year.
The deal builds on an 18-month-old relationship that seeks to couple Best Buy’s sourcing and distribution expertise with Carphone Warehouse’s strengths as a brick-and-mortar retailer. And it signals Best Buy’s desire to expand beyond mobile phones into the broader world of consumer electronics in Europe.
“We have been working closely with Best Buy for nearly two years,” said Carphone Warehouse CEO Charles Dunstone, “and it is clear that we have very complementary culture, skills and assets — it’s a perfect match. . Best Buy brings demonstrable expertise in merchandising, sourcing and customer service: that should help us accelerate the evolution of our business towards the broader connectivity market. We bring local knowledge, infrastructure and the expertise in linking services to product: that should help them push into larger-format consumer electronics retailing in Europe.”
Each company will provide three board members for the new venture, with ownership being split evenly. The deal is subject to the approval of Carphone Warehouse’s shareholders and is expected to close by August 30.