Best Buy is exiting the European market by selling 50% of their joint venture stake back to mobile phone retail company Carphone Warehouse for 500 million British pounds (US $775 million). Best Buy is selling their stake at a huge loss because they bought 50% of Carphone’s retail operations for $2.1 billion in 2008.
Best Buy announced that they entered a definitive agreement today to sell half of their business in conjunction with Carphone Warehouse. The deal includes 420 million British pounds in cash and 80 million British pounds in Carphone Warehouse stock. Around 29 million British pounds will go towards satisfaction of obligations under existing agreements including the Global Connect partnership between the two companies. This deal is subject to approval of Carphone Warehouse’s shareholders.
Best Buy will be hit with a non-cash asset impairment charge of about $200 million due to losses made in the accumulated foreign currency written off at the time of the deal closing. This transaction is expected to close by the end of June 2013.
“Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses,” stated Best Buy president and CEO Hubert Joly.