Best Buy hangs up on Carphone Europe venture

BEST Buy has called time on a disastrous European venture, selling its stake in Carphone Warehouse’s continental business for less than half what it paid five years ago.

Carphone Warehouse, the British mobile phone seller, yesterday announced it had struck a deal with the US electronics retailer to pay £471m for its 50 per cent stake in Carphone Warehouse Europe (CPW Europe), which has around 2,400 stores in eight countries.

The deal marks an end to an expensive and ultimately unsuccessful foray across the pond for Best Buy. It has lost over half of the £1.1bn it paid in 2008 to up its share of CPW Europe from three per cent to 50 per cent, and the sale comes less than two years after it closed down its 11 UK superstores.

The UK outlets, an attempt to replicate Best Buy’s US business, opened to great fanfare in April 2010 but were closed 19 months later.

Best Buy said yesterday that the sale would allow it to simplify the business, as stores struggle against online competition. The sale also puts an end to a long relationship between the two retailers, which started to dismantle when Carphone Warehouse sold its stake in Best Buy Mobile, the two firms’ US joint venture, in 2011.

Carphone Warehouse Group, which is funding part of the stock and cash purchase with a £105m share placing, said yesterday that CPW Europe’s revenues in the year to 31 March were down 5.5 per cent to £3.3bn.

ADVISERS THE END OF BEST BUY’S EUROPEAN VENTURE

JAMES LEIGH-PEMBERTON
CREDIT SUISSE

CARPHONE Warehouse brought in some of Britain’s most high profile advisers on its acquisition of Best Buy’s stake and subsequent share placing, with Credit Suisse, Deutsche Bank, UBS and law firm Osborne Clarke acting for the British company.

James Leigh-Pemberton, Credit Suisse’s UK chief executive, led the team providing financial advice to Carphone Warehouse, with the bank’s vice president for UK investment banking, Neil Pizey, also in on the deal.

Leigh-Pemberton, the son of former Bank of England governor Lord Kingsdown, was educated at Eton and started his career at SG Warburg, the investment bank that was bought by Swiss Bank Corporation in 1995, before it merged with UBS. At Credit Suisse, Leigh-Pemberton has worked on deals including Heineken and Carlsberg’s acquisition of Scottish & Newcastle, the FTSE 100 drinks company, in 2008.

As well as employing Credit Suisse as financial advisers, Carphone Warehouse hired Deutsche Bank and UBS as joint bookrunners and brokers for its £105m share placing. The deal also saw a host of legal advisers, with Osborne Clarke, led by corporate partner Jonathan King acting for longtime client Carphone Warehouse and Baker & McKenzie working for Best Buy.