Warehouse parting

30 April 2013 By Quentin Webb

The mobile phone retailer is buying the U.S. consumer chain out of their European joint venture. The $730 mln price looks cheap, and promises a big boost to the UK group’s earnings. With full control of the JV, Carphone Warehouse may also appeal to a wider range of investors.

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On April 30, London-listed Carphone Warehouse said it would buy out Best Buy Co Inc from the duo’s joint venture, Carphone Warehouse Europe, for a net 471 million pounds ($730 million). The JV operates nearly 2,400 stores. Shares in Carphone Warehouse rose 15.5 percent by 1400 GMT to 235 pence.
Best Buy will receive 341 million pounds upfront in cash, plus shares worth an extra 80 million pounds, based on a 190p a share price. It will receive two further payments of 25 million pounds in cash, one and two years after the deal completes. It paid 1.1 billion pounds to enter the joint venture in 2008.
Carphone Warehouse, Europe’s biggest seller of mobile phones, will part-fund the purchase with 250 million pounds of new debt and by placing new shares equivalent to just under 10 percent of its share capital, or about 91 million pounds. Deutsche Bank and UBS are bookrunners for the placing. Credit Suisse advised Carphone Warehouse.
Chairman Charles Dunstone owns 28.1 percent of Carphone Warehouse, while co-founder David Ross owns 12.3 percent. The joint venture is its main business. Carphone Warehouse also owns property and a 46 percent stake in Virgin Mobile France, the biggest “mobile virtual network operator” (MVNO) in France.

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