Carphone Warehouse Group plc (CPW.L) said it has entered into a series of proposed transactions with Best Buy Co., Inc. (BBY) in relation to the companies' joint interests in North America and Western Europe, and in relation to new opportunities in other jurisdictions globally.
Best Buy said it will purchase CPW's contractual interest in the Best Buy Mobile profit share agreement in the U.S. and Canada for approximately $1.3 billion. This purchase is expected to be financed with Best Buy's existing Domestic and International cash.
This transaction will result in the transfer to Best Buy of CPW's interest in the Best Buy Mobile profit share agreement. The purchase price will be expensed as a one-time charge after CPW shareholder approval, which is expected to occur in Best Buy's fourth quarter.
Best Buy Europe is announcing that it plans to close all 11 stores effective at the end of the calendar year, based on challenging economic conditions and profit expectations of the stores. Best Buy Europe had launched a big box format test in the U.K. in April 2010, ultimately resulting in 11 stores.
The purchase of CPW's contractual interest in the Best Buy Mobile profit sharing agreement and planned closure of the U.K. big box stores are expected to result in total pre-tax savings attributable to Best Buy of $180 to $210 million or EPS of approximately $0.35 to $0.40 in Best Buy's fiscal 2013.
In addition, Best Buy and Carphone Warehouse have agreed to form a new venture, Global Connect, which will address the connectivity opportunity on a global basis.
Post completion, the assets of Carphone Warehouse will comprise a 50% stake in Best Buy Europe, which in turn will own the core European mobile phone retailing operations, CPW Europe, which trades principally under "The Carphone Warehouse" and "The Phone House" brands.
Carphone Warehouse and Best Buy have also agreed a dividend policy for Best Buy Europe.
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