Carphone says could buy out European JV partner
LONDON (Reuters) - British mobile phone retailer Carphone Warehouse (CPW.L) would consider buying out Best Buy (BBY.N) from the two firms' European joint venture if a bid for the U.S. group succeeds, it said on Wednesday.
Carphone, Europe's biggest independent mobile phone retailer, would be entitled to buy Best Buy's 50 percent stake in CPW Europe if Best Buy founder Richard Schulze succeeds with a bid for the U.S. firm expected in December.
"Our shareholders would expect us to explore that, so we would," chief executive Roger Taylor told Reuters.
Under the joint venture deal a change in ownership at Best Buy would allow Carphone to buy the U.S. firm's 50 percent stake of CPW Europe - the British group's core business - at a 10 percent discount to a "fair value" that would have to be agreed.
"I am pretty confident we could finance most sensible values in terms of where we are at the moment," Taylor added.
A bid by Schulze for the world's largest consumer electronics chain could come in under his initially proposed $8 billion range, sources familiar with the matter told Reuters this month.
Carphone Warehouse on Wednesday posted a 1.6 percent rise in first-half underlying sales at the European business, ahead of a company-compiled consensus forecast for a 2 percent decline, as smartphone demand and UK postpay promotions boosted trade.
Shares in the firm, up nearly 30 percent over the last six months, rose 4.6 percent to 183.5 pence by 1010 GMT, valuing the business at around 872 million pounds ($1.4 billion).
Carphone's low-priced "Smart Deals" attracted more UK shoppers onto postpay deals, while a rise in higher-end smartphone deals also helped underlying sales grow 5 percent in its second quarter, following a 2 percent first-quarter decline.
"We have substantially increased our market share of UK postpay volumes and, while the prepay market remains weak, we hope for an improvement in the second half as the product pipeline continues to broaden," the firm said.
Group pretax profit grew 30 percent to 8.6 million pounds, ahead of a company compiled consensus forecast of 4.9 million.
First-half revenue rose 9.2 percent at Virgin Mobile France, where the firm said tough market conditions would see it close 80 stores as part of a restructuring that will deliver annualised pretax savings of 20-25 million pounds.
The group said there would be exceptional restructuring costs of 25-35 million pounds in the second half to cover the changes.
Carphone reiterated forecasts for 2012/13 headline earnings before interest and tax at CPW Europe of 130-150 million pounds, flat earnings at Virgin Mobile France and group underlying earnings per share of between 11.5 pence and 13 pence.
Taylor said a strong Christmas could see it hit the top of its range at CPW Europe, with demand for new, cheaper prepay smartphones likely to boost sales.
"I think the smartphones will have a bit of an uptick this year. I sense from some of the research we do smartphones could be back on the Christmas stocking list," he said.
(Editing by Rosalba O'Brien and Mark Potter)
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