Carphone Warehouse has acted to finally extricate itself from its joint venture with US group Best Buy.
The mobile phone retailer is paying £471m to take full control of the partnership, which owns 2,400 stores across Europe, ending a five year relationship. Carphone will pay £341m in cash and £80m in shares, with £50m deferred. In addition Carphone will place 47m shares to help fund the deal. In the market Carphone jumped nearly 13%, up 26.25p to 230p. Chief executive Roger Taylor said:
Following the sale of our US interest last year we have become increasingly responsible for the day-to-day operations of Carphone Warehouse Europe whilst conversely Best Buy has become more focussed on their wholly-owned business.
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 our relationship remains in place by way of our global buying alliance.
Best Buy bought 50% of Carphone's retail operations for around $1.2bn in 2008, but its plans for a chain of European megastores was abandoned in the face of a difficult consumer environment and a competitive market.
News of the Best Buy buyout came as Carphone, which also owns a 47% stake in Virgin Mobile France, reported better than expected like for like revenue growth of 6.5% in the fourth quarter.
It also announced the results of a strategic review of its stores in France, which will lead to a gradual withdrawal from the country at a cost of up to £90m. Analyst Nick Bubb said:
Much of the interest in Carphone Warehouse has been in potential strategic moves, like the much-mooted buyout of Best Buy's stake, but we weren't expecting Carphone to have tied that all up today. In fact, they have agreed to buy out Best Buy's stake in the core business for a net £471m, which seems a fair price, financed by a placing of 10% of the equity. Potential investors will be reassured by the better than expected trading momentum in the core business, with fourth quarter like for like sales growth of 6.5% better than the 3%/4% expected, after bumper growth in the UK. And management have been busy, as they have also announced an exit from France, with related write-offs.
