By Tiffany Hsu
12:57 PM EDT, April 30, 2013
Electronics retailer Best Buy Co. is leaving Europe, selling its stake in a partnership with London telecommunications company Carphone Warehouse Group as it attempts to simplify its operations.
The Minneapolis chain said Tuesday that the boards of both companies had approved a deal valued at $775 million to end a joint venture that began in 2008. Each firm holds a 50% stake in the venture, which involves stores in eight countries.
To take over Best Buy’s share, Carphone will pay roughly $650.6 million in cash and $123.9 million in Carphone stock. Best Buy will shell out about $45 million to settle existing agreements that will be terminated.
If Carphone shareholders approve the deal, the transaction is expected to close by the end of June. Before the sale, the Best Buy-Carphone joint venture was expected to pull in revenue between $5.5 billion and $5.6 billion in fiscal year 2014.
"Many assumed that the sale would just be a matter of time, but we were determined to do our own thorough review before proceeding,” Jon Sandler, a Best Buy spokesman, said in an email.
Best Buy is in the midst of a turnaround. The company has spent the last year slashing its workforce, shrinking store sizes and matching online prices in an attempt to stay competitive with rivals such as Amazon.com.
The European exit is designed to help Best Buy strengthen its balance sheet and improve returns, according to a statement from Hubert Joly, the French turnaround artist brought in last year to serve as chief executive.
The company’s presence in other countries such as China and Canada will remain the same, Joly said.
“Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses,” Joly said in the statement.
Copyright © 2014, Los Angeles Times