Thursday, May 8,2008 @ 9:10am
Best Buy, Carphone Warehouse to join
Best Buy and Carphone Warehouse on Thursday announced that they would create a new, jointly-run company to exploit each other's strengths. The total investment will equate to $4.2 billion and will see both the American electronics retailer and the British phone reseller take 50 percent stakes in the new venture, including both a financial stake as well as equal share in the 2,400 stores that make up the combined effort. Carphone Warehouse will continue to keep its landline businesses, while Best Buy will continue to own just under a three percent direct stake in its European counterpart.
The as-yet unnamed resulting company will benefit both sides, according to the two companies. Best Buy will use the effort to launch its retail chain in Europe and will also receive help with its stores in North America, where Carphone Warehouse says it will use its expertise in selling phones to help Best Buy develop its in-store Best Buy Mobile locations and better educate customers shopping for phones. Best Buy Mobile says it will roll out the Mobile section to "all" US stores by the end of 2008.
Carphone Warehouse in turn plans to use its investment to pay off debts and expand its retail presence further into Europe. It also anticipates increased resources for its high-speed Internet access business.
The union is contingent on the approval of Carphone Warehouse shareholders, who are expected to greenlight the deal by June 13th; the deal should be complete by the end of August.
A unified retail presence is likely to shift the landscape for consumer electronics, particularly in Europe. Few large-scale electronics retailers span multiple European countries or have American connections.