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May 08, 2008
Best Buy to Open Stores in Europe in $2.15 Billion Venture
By Michael Dinan TMCnet Editor The United States’ largest electronics retailer this morning announced that it’s joining with the United Kingdom’s largest mobile phone retailer to open its first-ever stores in Europe in a $2.15 billion venture.
Best Buy Co.’s 50-50 collaboration with Carphone Warehouse (News - Alert) Group Plc. will yield 2,400 retail stores in nine European nations, the companies announced during a conference call this morning.
Starting in the U.K., Best Buy will enter the European market under its own name next year, under the deal, presenting a challenge to a market led by retailers such as PC World, Currys and Dixons.
“This is an opportunity as much as anything to take advantage of our own expansion plans,” Roger Taylor, chief financial officer of London-based Carphone Warehouse, said during the conference call.
Best Buy may be looking to expand what’s already a strong foothold in the electronics retail market. The Richfield, Minnesota-based company generates nearly times as much revenue as Circuit City, its closest competitor.
Carphone Warehouse, Europe’s largest handset retailer, will not see a change in its ownership structure under the deal. Company officials said they’ll use proceeds to make acquisitions and invest in broadband expansion.
During the conference call, Taylor didn’t elaborate on what he called “very ambitious expansion plans.”
“The U.K. is obviously going to be a starting point,” he said.
The company has forecast that it’ll add 400,000 new subscribers to its current base of about 2.7 million. Part of the expansion could include an acquisition of Tiscali SpA, Taylor said. The U.K.’s fourth-largest Internet provider, Tiscali put itself up for sale two months ago.
The new company’s executive board will include representatives from both Best Buy and Carphone Warehouse.
The two companies have seen each other across the business meeting table before. Together they run Best Buy Mobile in the Untied States and Geek Squad, Best Buy’s tech services team, in Europe. Best Buy purchased 3 percent of Carphone Warehouse last year.
Last month, Best Buy reported that its fourth-quarter profit decreased 3.4 percent, to $737 million, in the three months ended March 1. Sales rose 4 percent to $13.4 billion, the smallest gain in nine years, the company reported.
Michael Dinan is a TMCNet Editor. To read more of his articles, please visit his columnist page.
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