Best Buy (BBY) Agrees To Purchase Carphone (CPW.L)

U.S. retailer Best Buy Company Inc. (NYSE:BBY) has agreed to buy British partner Carphone Warehouse (LSE:CPW.L) out of their fast-growing mobile phone venture for over $1 billion. The deal, first reported by Sky News, is expected to be announced on Monday.

Sky News reported a source saying that Carphone Warehouse would return some of the proceeds from the sale of its profit-share in Best Buy Mobile U.S. to investors, which include its founder and 29-percent shareholder Charles Dunstone. Carphone Warehouse declined to comment. Best Buy could not immediately be reached for comment.

Best Buy agreed to buy 50% of Carphone Warehouse’s retail operations for $2.1 billion in May 2008 in hopes to use it as a launchpad for its expansion into Europe and to tap the British company’s expertise in mobile phones.

Although Best Buy Mobile exceeded expectations, the down turn in the economy and stiff competition from other retailers rendered the plan for a chain of Best Buy branded stores in Europe a flop. Closing the stores, which employ around 1,000 staff, would be the latest retreat by Best Buy from international markets as it looks to focus on its main business in the face of competition from discounters and online rivals. Also this year, the group exited Best Buy-branded stores in China and also dropped plans to expand in Turkey.

Best Buy Company Inc. is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada, China and the United Kingdom. Best Buy is also the largest retailer of cellular phones with phones from Verizon Wireless, AT&T Wireless, Sprint PCS, and T-Mobile.

In gearing up for the U.S. holiday season, Best Buy announced that on Nov. 25, the hottest Black Friday deals on must-have holiday gifts will be available even earlier when Best Buy opens its doors at 12 midnight. In more than 20 key markets, the retailer also will host a major cinematic event at its stores at 9 p.m. local time, details of which will be announced in coming days.

“At Best Buy, we’re focused on creating an unparalleled shopping experience for our customers,” said Barry Judge, Best Buy’s executive vice president and chief marketing officer. “Black Friday is just the beginning. This commitment will come to life throughout the holiday season in a variety of offers and initiatives that give customers great values and the most convenient ways to shop for everyone on their list.”

Shares of Best Buy were trading at 27.31, up 1.11% at the close of trading on Friday.

written by

Rachel Brook is an up and coming financial writer focusing on commodity price inflation and how the overall market reacts to the price swings. She also covers emerging markets in Africa and SE Asia.
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