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Carphone dials up £1.1bn European link

Created:
8 May 2008
Written by:
Claer Barrett

US retail giant Best Buy is to buy 50 per cent of the Carphone Warehouse's European and US retail interests for £1.1bn, creating a new joint venture to sell consumer electronics goods in Europe.

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Carphone said it will use the proceeds to pay down debt, and make further investments in its telecoms network. Last month, it projected its net debt to increase to £800m at the year-end against previous guidance of £650m.

The deal is estimated to dilute earnings per share by 10-15 per cent in the year to March 2009, and has increased speculation among analysts that Carphone will make a bid for rival UK broadband operator, Tiscali.

SHARE TIP UPDATE

Sell

Shares in Carphone moved down nearly 2 per cent in morning trading to 294p, below our original sell tip (310p, 1 February 2008). With broadband and mobile phone markets getting tougher, increasing its exposure to consumer electronics - possibly retail's toughest market - is a brave call. We reiterate our sell advice.

Last IC View: Sell, 241p, 15 Apr 2008

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