Best Buy bails out of European venture in $775M deal
The U.S. electronics retail giant will leave the European market by selling its 50 percent stake back to its partner, the U.K.-based Carphone Warehouse.
Best Buy is selling its 50 percent joint venture stake back to mobile phone retailer Carphone Warehouse for 500 million pounds ($775 million).
It's a massive loss for Best Buy, which bought 50 percent of Carphone Warehouse's retail operations for $2.1 billion in 2008, during the time where the global financial crisis was about to kick the European market firmly where it hurts.
In a statement on Tuesday, Best Buy said it has entered a definitive agreement to sell its half of the business in conjunction with Carphone Warehouse back to the company. The total figure includes 420 million pounds in cash and about 80 million pounds in Carphone Warehouse's stock.
In addition, 29 million pounds will satisfy obligations under existing agreements.
The deal is subject to the approval of Carphone Warehouse's shareholders, but not subject to any financial closing conditions. Best Buy will also see a non-cash asset impairment charge of around $200 million, as a result of the losses made in accumulated foreign currency written off at the time of the deal closing.
The transaction is expected to close by the end of June 2013, the statement said.
"Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses," Best Buy president and chief executive Hubert Joly said in prepared remarks.
The U.S. technology retailer joined up with U.K. mobile phone seller in 2008 in a bid to expand to the European market. It was hoped that around 200 stores would open up under the Best Buy brand across the EU over the coming years.
In 2011, the first sign of trouble began to show when Carphone Warehouse announced it would close 11 branded Best Buy stores it first opened up around the U.K. during the year. But a poor economic climate and general consumer apathy led to a rejection on British stores, hampering any likelihood of rolling out stores across the continent.
Best Buy still has more than 1,300 stores worldwide, including many outside the U.S.
This story originally appeared at ZDNet's Between the Lines under the headline "Best Buy exits European market; sells stake back to Carphone Warehouse for £500M/"