Best Buy has revealed a definitive agreement to sell its 50-percent share of Best Buy Europe to Carphone Warehouse, which it entered into a joint venture with back in 2008. The sale will take place for the equivalent of $775 million, with the majority of it coming in the form of cash and the rest of it being offered in Carphone Warehouse Group stock with a one-year restriction, during which time the group can sell the shares on Best Buy's behalf at issued prices and higher.
If such happens, the agreement has Carphone Warehouse pegged to pay whatever difference may result under an approximate $99 million agreement based on the sum total of the aforementioned proceeds Best Buy receives in addition to the market value of whatever shares may remain. In addition, says the announcement, Best Buy has to pay nearly $45 million to Carphone Warehouse to settle some current obligations it has with the group.
Although it is a definitive agreement, it isn't yet completely settled, something that is currently slated to take place this upcoming June. Carphpne Warehouse shareholders need to approve the deal, but its board of directions have agreed and signed letters of commitment to the transaction. Likewise, Best Buy's board also agrees with the deal. There are currently Best Buy stores being run in eight countries as part of the joint venture between the two companies.
Best Buy's President and CEO Hubert Joly said about the announcement: "After reviewing the business and spending time with our partners, we concluded that the timing and economics were right to enter into this agreement with CPW. This transaction allows us to 1) simplify our business; 2) substantially improve our Return on Invested Capital, one of the five pillars of our Renew Blue transformation; and 3) strengthen our balance sheet."
[via Best Buy]