Minneapolis -- Consumer electronics retailer Best Buy is leaving the European market. The company is selling its stake in a joint European venture with U.K.-based consumer electronics retailer Carphone Warehouse Group PLC for cash and stock worth about $775 million USD.
Best Buy Co. will also pay Carphone 29 million pounds (about $45 million) related to existing agreements that will be terminated when the deal closes. The U.S. retailer also said that it will incur an approximately $200 million asset impairment charge related to the stake sale.
Best Buy says it is ending the agreement, launched in 2008, due to difficulties that both the company and the European economy have faced in recent years.
“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," said Hubert Joly, president and CEO of Best Buy.
The transaction allows Best Buy to simplify its business, improve its return on invested capital and strengthen its balance sheet, Joly added.
"Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses," said Joly.
Both companies' boards approved the transaction, which still needs the approval of Carphone shareholders. The deal is targeted to close by the end of June.