TMCnet News
The Carphone Warehouse Group and Best Buy to Begin European Venture(Wireless News Via Acquire Media NewsEdge) The Carphone Warehouse Group and Best Buy announced they have agreed to form a new venture to capitalize on European consumer electronics. The companies said the assets of the newly formed company will comprise The Carphone Warehouse s existing retail business, operating from more than 2,400 stores in nine European countries under the Carphone Warehouse and Phone House brands; and The Carphone Warehouse s share of its existing relationships with Best Buy. According to the companies, consumer electronics has been a growing category in European retail over the past five years and represents an estimated market of approximately 89 billion ($175 billion). The two companies expect growth in consumer electronics to be led by the convergence in entertainment, computing and communications. Best Buy and The Carphone Warehouse expect wireless information provision, mobility and broadband to create significant new consumer and business opportunities. The companies noted that on completion of the transaction, The Carphone Warehouse and Best Buy will each own 50 percent of the retail business, comprising all the 2,400 stores, the web and direct businesses, the insurance operations, and its airtime reselling businesses. The Carphone Warehouse continues to own 100 percent of its fixed line telecoms business in the U.K., comprising TalkTalk, AOL Broadband and Opal; and its share of the Virgin Mobile France joint venture. Best Buy continues to hold its 2.9 percent stake in The Carphone Warehouse. The purpose of the new venture is three-fold. Specifically, the new company plans: - To continue to grow The Carphone Warehouse s existing retail business through further physical expansion in its existing European markets, the acceleration of the current evolution towards mobile and fixed line connectivity, growth in private-label products, and the realization of benefits from joint purchasing, joint sourcing and merchandising optimization; - To build a significant market share in consumer electronics retailing in Europe, through the roll-out of Best Buy stores, services and websites in selected markets, beginning in calendar 2009; and - To bring to Best Buy s core North American operations The Carphone Warehouse s expertise in sourcing mobility products, bundling services and operating smaller stores, thereby enhancing and diversifying Best Buy s skill set for improving its customer experience. Charles Dunstone, CEO of The Carphone Warehouse, said, Today s announcement marks the next big step in The Carphone Warehouse s growth story. We have built The Carphone Warehouse by anticipating consumers changing needs and adapting in advance to meet them. Our core principles of full range, impartial advice and best value have underpinned the creation of our leading position in mobile retailing. Our approach to fixed line telecoms and our subsequent launch of free broadband followed these principles by championing choice and value for customers in a traditionally uncompetitive marketplace. Each of these businesses in its own way has changed the market it serves, and each has benefited shareholders as well as customers. We have been working closely with Best Buy for nearly two years, Dunstone continued, and it is clear that we have very complementary cultures, skills and assets it s a perfect match. It is also clear that we have a significant opportunity for incremental growth in our retail business which we can best realise with Best Buy on board. Best Buy brings demonstrable expertise in merchandising, sourcing and customer service: that should help us accelerate the evolution of our business towards the broader connectivity market. We bring local knowledge, infrastructure and the expertise in linking services to product: that should help them push into larger format consumer electronics retailing in Europe. Roger Taylor, CFO of The Carphone Warehouse, said, We are joining forces with a leader in consumer electronics retailing to enter a major new market together. Best Buy s track record of value creation speaks for itself. In addition, the proceeds from the transaction give us the power and flexibility to maximise the value of our fixed line business and enhance its scale and profitability. Our employees, customers and suppliers all stand to benefit from the increased opportunities that the venture brings as do our shareholders. We welcome our expanded relationship and are very excited about its future growth prospects. Both companies could have pursued their goals individually, said Brad Anderson, Vice Chairman and CEO of Best Buy. However, we believe that we can collapse time, increase our success with consumers and create more shareholder value for both companies by pursuing our goals together. The Carphone Warehouse offers complementary capabilities as well as local customer insights, and has a similar passion for the customer and employee experience. Bob Willett, CEO - Best Buy International and Chief Information Officer, said, We ve been successful with our business model and aspire to apply that model to one of the largest markets in the world. Yet we must do so carefully and with humility. We have seen great companies fail because they thought they could simply export their current business model to new geographies. We intend to plan our European entry strategy carefully, focused on customer needs, and with on-the-ground help from our trusted partner, The Carphone Warehouse. We have been sharing experiences with The Carphone Warehouse for four years and working closely with them for the last two, said Brian Dunn, President and Chief Operating Officer of Best Buy. Both companies focus on anticipating and meeting the changing needs of customers. Our cultures are similar, and we share a mutual trust and common values. We believe our combined expertise has potential to result in significant financial upside as we together attempt to transform retail in Europe through the Carphone Warehouse, Phone House and Best Buy brands. Consumers needs, both explicit and latent, are dramatically changing, and we want to capitalize on those. We also intend to make the substantial capabilities of Best Buy fully available to the new venture to ensure its successful growth. The transaction is expected to close during Best Buy s fiscal second quarter, which concludes on 30 August 2008. The Carphone Warehouse is a European independent retailer of mobile phones and related services. ((Comments on this story may be sent to [email protected])) ((Distributed on behalf of 10Meters via M2 Communications Ltd - http://www.m2.com)) ((10Meters - http://www.10meters.com)) Copyright ? 2008 Wireless News |