Best Buy founder gets thumbs up to examine books in deal that could prove massive boost for UK phone retailer
Britain’s Carphone Warehouse looked back on track for a strategic boost to its fortunes last night [27th August 2012] following news that takeover talks for its US partner Best Buy had resumed. The pair share ownership of retailer CPW Europe, which in the UK operates under the Carphone Warehouse brand, as well as the emerging markets-focused business Global Connect. But if Best Buy is taken over, Carphone Warehouse owner chairman Charles Dunstone can enact a clause in the original deal with the US retailer that allows him to buy back his half of his business for just £440 million which, at current exchange rates, is around £660m less than Best Buy originally paid him.
It could also allow Carphone to seize hold of the partnership’s European business at the same time selling its stake in Global Connect – both of which moves analysts believe are likely.
In the US, meanwhile, it was confirmed last night that Best Buy’s founder Richard Schulze had agreed terms with the company he still has a fifth stake in to examine its books as a precursor to making a bid.
Up until now the two sides have bickered over the due diligence process with Schulze demanding more leeway but Best Buy’s directors remaining intransigent.
But now Best Buy has relented and will give Schulze access to the company’s accounts in addition to waiving Minnesota law to speed up a deal. The firm’s shares, which last week fell after feeble trading results, closed up 3.2 per cent.
Meanwhile Schulze’s takeover team have set up a nerve centre where, if they’re satisfied with Best Buy’s financial propriety, can move formally towards forming a buy-out group. It then has 60 days to present Best Buy with a proposal.
But if Best Buy reject his offer he won’t be able to pitch another deal to the company’s shareholders until January next year.
Sources close to Schulze, who resigned from the company he founded in June this year amid a scandal surrounding the firm’s then CEO Brian Dunn and his relationship with a female staffer, believe he is on track to raise the necessary funds for the buy-out.
He has enlisted four major private equity firms to finance a bid worth approximately $9 billion.
On early trading in London today Carphone’s shares were up by 0.23 per cent.