Best Buy Co., Inc. (NYSE:BBY) announced this morning that it was pulling out of Europe by selling its stake in its joint venture with Carphone Warehouse. As a result, shares jumped as much as 6.57 percent in pre-market trading and kept climbing 8 percent after opening bell.
The electronics retailer said it would sell its 50 percent joint venture to its partner, the U.K. mobile phone retailer Carphone Warehouse. The deal is worth $775 million in cash and shares of Carphone Warehouse’s stock. According to CNET, the sale is a big loss for Best Buy Co., Inc. (NYSE:BBY) because it purchased the stake in 2008 for $2.1 billion. That was right before European markets started feeling the effect of the global financial crisis.
The sale of Best Buy’s stake must still be approved by shareholders of Carphone Warehouse. If it happens, the retail chain will have a $200 million non-cash asset impairment charge. Those losses are made in accumulated foreign currency and will be written off when the deal closes. Best Buy Co., Inc. (NYSE:BBY) said it plans to close the deal by the end of June.
The U.S. retail giant has been struggling to remain profitable and has been closing stores and restructuring in an effort to battle a practice known as “showrooming,” in which consumers visit the store to view electronic items and then order them online at a lower price. Earlier this month, Best Buy announced that it would open mini Samsung stores inside many of its locations as a way to fight showrooming.
Best Buy has more than 1,300 stores around the globe, most of which are in the U.S.
