Best Buy Co. is getting out of Europe.
The Richfield-based consumer electronics retailer said it will sell its 50 percent stake in Best Buy Europe to Carphone Warehouse (CPW), its joint venture partner, for about $775 million in cash and stock.
The move, widely anticipated by Wall Street, will allow Best Buy to focus on its core operations in North America, said CEO Hubert Joly.
"We concluded that the timing and economics were right to enter into this agreement," Joly said. "This transaction allows us to simplify our business ... and strengthen our balance sheet."
Under the deal, which will close in June, Best Buy will receive an estimated $650 million in cash and $124 million in Carphone Warehouse stock. However, Best Buy will pay CPW $45 million to end their Global Connect partnership, in which the two companies planned to sell their mobile store expertise to other retailers around the world. Best Buy said it also expects to record a noncash $200 million asset impairment charge in the first quarter of this year.
From a financial standpoint, Best Buy appears to have absorbed a significant loss compared to the $2.1 billion the company invested in the original deal that created the joint venture.
But investors welcomed the move as Best Buy shares jumped nearly 11 percent, to $26.79, in morning trading Tuesday.
When Best Buy and CPW formed Best Buy Europe in 2008, during the start of the Great Recession, the plan was for the new company to build Best Buy branded big boxes and operate Carphone Warehouse stores in countries such as Spain, France and Portugal. But Europe's economic woes have weighed heavily on the joint venture.