Carphone Warehouse to Sell Half its Retail Arm to Best Buy
Published on: 7th May 2008
Note -- this news article is more than a year old.
The UK based mobile phone retailer, Carphone Warehouse (CPW) has announced plans to sell half of its retail assets to US based Best Buy so that the company can focus on its fixed broadband and telecoms services. Some sort of decision involving Best Buy has been expected for a couple of months, and recent bounces in the CPW share price has fueled the speculation.
CPW is divesting its entire European retail assets of some 2,4000 stores into a separate company - which will become a 50:50 joint venture with Best Buy. The US company is paying USD2.1 billion for its 50% stake in the new company. CPW says it will use the proceeds from the sale to pay down its debt and invest in its broadband and landline telecoms businesses.
On completion of the transaction, The Carphone Warehouse and Best Buy will each own 50% of the retail business, comprising all the 2,400 stores, the web and direct businesses, the insurance operations, and its airtime reselling businesses. The Carphone Warehouse continues to own 100% of its fixed line telecoms business in the U.K., comprising TalkTalk, AOL Broadband and Opal; and its share of the Virgin Mobile France joint venture.
The company will - it seems - also rebrand the mainland European operations under the Best Buy franchise from 2009. No comment was made about the UK operations which will probably retain their Carphone Warehouse identity.
Charles Dunstone, CEO of The Carphone Warehouse, said, "Today's announcement marks the next big step in The Carphone Warehouse's growth story. We have built The Carphone Warehouse by anticipating consumers' changing needs and adapting in advance to meet them. Our core principles of full range, impartial advice and best value have underpinned the creation of our leading position in mobile retailing. Our approach to fixed line telecoms and our subsequent launch of free broadband followed these principles by championing choice and value for customers in a traditionally uncompetitive marketplace. Each of these businesses in its own way has changed the market it serves, and each has benefited shareholders as well as customers.
The two companies have be in a joint venture in the USA for a couple of years - and the new joint venture includes the US assets.
It is proposed that The Carphone Warehouse's existing European retail management team will remain responsible for the day-to-day management of the new venture. In due course, the team will be supplemented by additional personnel from Best Buy as the development of the Best Buy stores and websites gathers pace. Bob Willett is expected to be chairman of the new venture, and Roger Taylor, The Carphone Warehouse's Group CFO, is anticipated to be CEO in addition to retaining his existing duties.