“NEW YORK/LONDON (Reuters) – U.S. retailer Best Buy Co Inc retreated from its ill-fated European expansion on Tuesday by selling its stake in a joint venture to Carphone Warehouse Group for less than half what it paid five years ago.
The 500 million pounds ($775 million) sale is the latest sign the world’s largest consumer electronics chain is scaling back its overseas ambitions to focus on its mainstay U.S. business, which faces cut-throat competition from the likes of Wal-Mart Stores Inc and Amazon.com Inc .
The deal will strengthen Best Buy’s balance sheet, simplify its business and improve its return on invested capital, CEO Hubert Joly said in a statement, adding that the timing and economics felt right for the deal.
But allowing for currency fluctuations, the price is less than half the roughly $2.1 billion Best Buy paid in 2008 for 50 percent of the independent mobile seller’s retail operations.
“(Best Buy) basically paid 1.1 billion (pounds) for the same half they are selling back to us today for a lot less,” Carphone Chief Executive Roger Taylor said.
“When they bought in they had aspirations to put Best Buy stores across Europe, and they probably paid a premium for that, and in the end that strategy didn’t work for many reasons.”
Europe’s economic prospects continue to worsen on the back of searing budget cutbacks to deal with a crisis of government debt in several southern countries, while the U.S. economic recovery increasingly looks firmly on track….”
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