Best Buy steps out of Europe
The price is comprised of 420 million euro in cash and 80 million euro in CPW stock subject to a 12-month lock-up restriction. During the lock-up period both parties have agreed that CPW will be able to place the CPW shares on behalf of Best Buy at or above the issue price, with any additional proceeds above the issue price being retained by CPW.
If at the end of the lock-up period the sum of the total proceeds received by Best Buy from sales of the CPW shares by CPW plus the market value of any remaining shares is less than $99 million (64 million euro), CPW will pay such deficiency to Best Buy.
Best Buy has agreed to pay CPW $45 million (approximately 29 million euro as of April 29, 2013) in satisfaction of obligations under existing agreements, including the parties’ Global Connect partnership, which will be terminated at closing.
The boards of directors of both companies have approved this transaction. All directors of CPW have also signed letters of commitment to vote their shares in support of the transaction. The transaction is subject to approval by the shareholders of CPW, but is not subject to any closing conditions in respect of financing. The transaction is expected to close by the end of June 2013.
Beginning in the first quarter of fiscal 2014, Best Buy intends to report the results of the Best Buy Europe joint venture in discontinued operations, including an estimated non-cash asset impairment charge of approximately $200 million, associated with accumulated foreign currency translation losses that will be written off at the time of closing.
Prior to entering into this agreement, U.S. GAAP revenues for Best Buy Europe in fiscal 2014 were expected to be in the range of $5.5 to $5.6 billion. Adjusted (non-GAAP) diluted earnings per share were expected to be immaterial. ■