Carphone Warehouse is selling a 50 per cent stake in its mobile phone retail business to US electronics retailer BestBuy, setting the stage for a heavyweight fight in the UK's retail electronics market.
The deal will bring CPW £1.1bn in cash, enough to sort out its debt problems and could leave enough in the till to buy Tiscali. Interviewed on Radio 4 this morning, chief executive Charles Dunstone did little to dismiss this possibility.
CPW has 2,400 stores in nine countries and an existing relationship with BestBuy - they run a joint venture in the US selling mobile phones.
Reports suggested the firms would leave CPW's existing stores largely untouched - initially - but future, presumably much bigger stores, would operate under the BestBuy brand with a much broader consumer electronics range.
Presumably the deal will leverage CPW's UK retail expertise - as much in dealing with landlords as anything else - with BestBuy's background sourcing and shifting mountains of consumer goodies. Such a combination would deliver a shock to other High St phone operators, and the UK's big box electronics chains such as DSG and Comet.
BestBuy has large consumer electronics stores that have managed to maintain growth despite the US downturn. The firm managed like-for-like growth in 2007 of five per cent in a US economy which only grew by 0.6 per cent.
Carphone Warehouse believes moves to convergence mean a growing market for a range of mobile devices and wireless services - which will be helped by Best Buy's retail expertise.
The deal includes retail stores, insurance, airtime reselling, and the Geek Squad but excludes CPW's stake in Virgin Mobile France and freehold properties.
Best Buy CEO Bob Willett will be chairman of the new business and CPW's CEO Roger Taylor will also take on the role of CEO of the new business.
The deal needs approval from CPW shareholders at an extraordinary meeting in early August. ®