In 2008, Best Buy paid about $1.1 billion to increase its 3% stake in Carphone Warehouse to 50%. The European firm operates about 2,400 stores in eight European countries. Best Buy has agreed to pay Carphone Warehouse approximately $45 million by the deal’s closing to exit existing agreements.
Best Buy’s CEO said:
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 [Carphone Warehouse]. 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.
From the look of it, Best Buy got a pretty good deal here. Sure it lost a few hundred million over five years, but the performance of its U.S. stores was much worse than that.
Shares of Best Buy are up about 5% in premarket trading this morning, at $25.40 in a 52-week range of $11.20 to $26.29.
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