Best Buy buys out U.S. mobile partner for $1.3 billion
By Mark Potter and Dhanya Skariachan
LONDON/NEW YORK (Reuters) - Top electronics chain Best Buy Co is buying its British partner out of a fast-growing U.S. mobile phone joint venture for $1.3 billion and scrapping plans for a chain of European megastores.
The moves are the latest sign Best Buy is scaling back its overseas ambitions to focus on its main U.S. business, which faces stiff competition from discounters and online retailers. Earlier this year, the U.S. group dropped plans for Best Buy-branded stores in China and Turkey.
The decisions also underscore the gloomy outlook for European retailers as consumers there grapple with rising prices, subdued wages growth and government austerity.
Best Buy said on Monday it would buy out Carphone Warehouse from their Best Buy Mobile venture in the United States and Canada, which has benefited from soaring demand for smartphones like Apple Inc's iPhone.
"For Best Buy to be able to no longer have to share 50 percent of the profits of a high-margin, fast-growing business with Carphone Warehouse, from my perspective, is a real positive," said BB&T Capital Markets analyst Anthony Chukumba.
"(But) it is not a game-changer. Best Buy still has the same challenges they did 24 hours ago -- fairly weak product cycle particularly in flat-panel TVs, increasing competition from Amazon, probably too much retail square footage."
Best Buy shares were down 3.3 percent at $26.40 on Monday afternoon, while Carphone shares closed up 0.9 percent at 348 pence on the London Stock Exchange.
The deal gives Best Buy more flexibility to use employees in its U.S. mobile phone stores to sell more than just phones, CEO Brian Dunn told Reuters in an interview. Continued...