Best Buy is pulling out of Europe.
Best Buy today announced plans to sell its stake in the European arm of Best Buy. The company said it would sell its 50 percent stake of Best Buy Europe to Carphone Warehouse. The two companies entered into a joint venture to form Best Buy Europe five years ago, in 2008. At the time, the plan was to have 200 shops across Europe by 2013, however, things didn't quite go as planned. By June of 2011, just 11 stores had opened, at which point the roll-out was officially halted. In November of that same year, Carphone confirmed plans to close down all of the UK's Best Buy locations.
Speaking today, Best Buy confirmed that it had entered into a definitive agreement for the sale of its 50 percent interest in Best Buy Europe. The sale is valued at £500 million (roughly $775 million), and will include £420 million in cash and £80 million in Carphone Warehouse stock.
"After reviewing the business and spending time with our partners, we concluded that the timing and economics were right to enter into this agreement with CPW," said Hubert Joly, president and chief executive officer of Best Buy. "This transaction allows us to 1) simplify our business; 2) substantially improve our Return on Invested Capital, one of the five pillars of our Renew Blue transformation; and 3) strengthen our balance sheet," added Joly.
Best Buy says the deal has already been approved by both boards of directors but that the transaction still needs approval from shareholders. It is not subject to any closing conditions in respect of financing and is expected to close by the end of June.