Best Buy Co, the world’s largest consumer electronics retailer, agreed to sell its 50 percent stake in a European mobile-phone venture to partner Carphone Warehouse Group PLC for ￡500 million (US$775 million).
Best Buy will receive ￡420 million in cash and ￡80 million in Carphone Warehouse stock, the Richfield, Minnesota-based retailer said in a statement yesterday.
The company expects to close the transaction by the end of next month.
Best Buy chief executive officer Hubert Joly, who took charge in September, is evaluating the retailer’s foreign units to free up cash and resources in his effort to revive US stores hurt by competition from Amazon.com Inc and Wal-Mart Stores Inc.
Best Buy generates about 25 percent of its revenue from operations in Europe, China and Canada.
“This transaction allows us to simplify our business,” Joly said in the statement.
It also strengthens Best Buy’s return on invested capital and balance sheet, he said.
Best Buy projected revenue of US$5.5 billion to US$5.6 billion in Europe this fiscal year, with adjusted per-share earnings “expected to be immaterial.”
The decision to exit Europe “should not suggest any similar action in our other international businesses,” Joly said.
Best Buy’s international segment posted an operating loss of US$881 million in the fiscal year ended Feb. 2 on revenue of US$12.8 billion.
Revenue totaled US$49.6 billion companywide.
Best Buy formed the Best Buy Europe joint venture with London-based Carphone Warehouse in 2008 and they now operate stores in eight countries.
The two companies are also terminating a venture that sells laptops, tablets and mobile phones outside of Europe and North America. Best Buy said it would pay Carphone Warehouse ￡29 million to satisfy obligations from that venture.
Best Buy advanced 3 percent to US$24.20 on Monday in New York trading.