Best Buy Selling Its Europe Business
Jun 14th 2013 3:28PM
Updated Jun 19th 2013 11:30AM
Best Buy has given up its plans in Europe.
After five years of expanding into the region, Best Buy announced today that it has decided to sell its 50% interest in Best Buy Europe to partner Carphone Warehouse Group (CPW) in a deal valued at $775 million, including $573 million in cash at closing. Best Buy and Carphone joined to create the Best Buy Europe venture in June 2008. The joint venture operates stores in eight countries.
The two parties agreed Monday to a $775 million deal; 84% of the deal will be paid in cash, while Best Buy will receive the remaining amount in CPW stock subject to a 12-month lock-up restriction.
During the lock-up period, both parties have agreed that Carphone will be able to sell CPW shares on behalf of Best Buy at or above the issue price. Carphone will keep any additional proceeds above the issue price. However, if the market value of Best Buy's CPW shares falls short of $99 million, then Carphone will pay Best Buy the difference.
Additionally, Best Buy will pay Carphone about $45 million to end their Global Connect partnership.
The board of directors from both companies have agreed to the transaction and expect the transaction to close by the end of June. Prior to the deal, U.S. GAAP revenues for Best Buy Europe in fiscal 2014 were expected to be in the range of $5.5 billion to $5.6 billion. Adjusted (non-GAAP) diluted earnings per share were expected to be immaterial.
In the company's press release, Best Buy CEO Hubert Joly said the deal allows Best Buy to simplify its business, "substantially improve" return on invested capital, and strengthen its balance sheet. "Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses," he was quoted as saying.
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