Carphone Warehouse to acquire Best Buy’s stake in joint venture

Carphone said £341m will be paid in cash on completion of the acquisition. Best Buy will take an £80m stake in Carphone Warehouse and pay £50m deferred cash consideration in the next two years.

The Carphone Warehouse Europe joint venture generated £3.3bn in revenues and £119m pre-tax profit in the year to March 31.

The deal marks the end of a five-year partnership between Carphone and the US electricals giant. The companies will retain a buying alliance sourcing product from the Far East.

Carphone Warehouse chief executive Roger Taylor said: “Carphone Warehouse and Best Buy have enjoyed a great relationship over the last five years ensuring that we shared and enjoyed many aspects of each other’s business attributes.

“However, 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 have become more focused on their wholly-owned businesses.

“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 that our relationship remains in place by way of our global buying alliance.”

Taylor said the arrangement will simplify its ownership structure and streamline management decisions.

Carphone also reported a 6.5% uplift in like-for-like sales in the fourth quarter to March 31. Total connections rose 9.7%.

The retailer has forecast full-year headline EBIT will be between £135m and £145m.

Carphone said it had “maintained the significant tablet sales growth seen in the third quarter, as we gained further authority in this product category”.

The retailer “enjoyed positive like-for-like revenue growth” in Europe, excluding France where difficult market conditions held back performance. As a result, Carphone has decided to exit France and will “pursue an orderly exit by means of store disposals and some store closures”.