麻豆社

Dunstone deals again

• Robert Peston
• 8 May 08, 07:08 AM

's great hero is Sir Richard Branson. And just like Branson, Dunstone never seems happy unless he is testing himself with some bold new business venture.

Though its only a couple of years since Dunstone - which has ultimately paid off but wreaked some havoc on his company along the way - he is now reshaping his retailing operation.

He is calls its distribution operation - basically its stores - to of the US for 拢1.1bn.

Best Buy is a retailer from another planet, where everything is much much bigger.

It is four or five times the size of Carphone, with annual sales greater than 拢20bn and about a fifth of the US market.

It sells every conceivable electronics and electricals device from vast superstores, comparable in size to a large Tesco and much bigger than anything we have here.

It's the biggest customer for a number of computer manufacturers.

So it's big.

And it wants to be big in Europe.

Best Buy has chosen Carphone Warehouse as its partner in this European invasion because the two already work together in the US - where Carphone has developed an operation selling mobile phones within Best Buy's giant stores.

Dunstone, Carphone Warehouse's founder and chief executive, tells me that the jointly owned company wants to build as great a share of the European market as Best Buy has in the US.

Note that the ownership of Carphone Warehouse as a corporate entity remains unchanged. It is selling a half share in what it calls its distribution business, which operates 2,400 stores in nine European countries.

Best Buy is not buying any of Carphone Warehouse's broadband or telephony operation, which trades under the TalkTalk and AOL brands.

Carphone Warehouse will use the 拢1.1bn being paid by Best Buy to reduce its debt and invest in developing both the broadband and retailing businesses.

The deal comes at a time when trading is difficult in the UK for many retailers. The market leader in electricals and electronics retailing, DSG - the owner of Currys - has been having a particularly torrid time and has issued a couple of profit warnings since the start of the year.

But if is looking for a crumb of comfort, it could do worse than look at the precedent of WalMart's takeover of Asda in 1999.

That deal hasn't been a flop. But WalMart didn't transform grocery retailing in the UK - and in the years since WalMart arrived, Tesco has increased its lead over Asda.

That said, DSG's managerial reputation is not on a par with Tesco's.

And Dunstone is among the two or three most determined entrepreneurs I have encountered over many years.

Oh, and I almost forgot, this transaction shows that - in spite of the pervasive gloom across the retailing sector, and in spite of the credit crunch - not all retailers have descended into the kind of chronic depression that prevents them doing any kind of deal.

Some Carphone shareholders may grumble that Dunstone is selling this stake at the wrong point of the economic cycle and that he could have received a better price if he had waited till the good times return.

But he owns a third of Carphone and is not taking out a penny. Which is pretty good evidence of his conviction that in the coming years this tie-up will generate significant incremental profits.

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