Best Buy Acquires Top Canadian CE Chain
By Tedra Meyer -- TWICE, 8/14/2001
Vancouver, British Columbia - The nation's largest consumer electronics retailer, Best Buy, announced today that it will acquire Future Shop, Canada's largest CE retailer, for approximately $377 million.
Under the agreement, which is scheduled to close in late September, Minneapolis-based Best Buy has agreed to tender an offer of cash for Future Shop stock in the amount of $11.05 per share (all figures in U.S. units). The company expects the acquisition to be accretive to earnings in the current fiscal year, adding one to two cents per share.
Burnaby, B.C.-based Future Shop, which opened in 1982 and currently operates 88 stores as well as the Web site www.FutureShop.ca , will operate as a separate Canadian subsidiary of Best Buy Co.
'This acquisition accelerates by several years our goal of becoming North America's premier retailer and eventually the leading global retailer of technology and entertainment products and services,' said Richard Schulze, founder, chairman and CEO of Best Buy, which placed No. 1 on the 2001 TWICE Retail Registry.
Best Buy's buying spree began last December, when the company announced plans to purchase Musicland Group and Magnolia Hi-Fi in a cash deal worth more than $760 million. The purchases placed 1,331 stores in the Musicland stable - including Sam Goody and Suncoast - and Magnolia Hi-Fi's 13 Pacific Northwest locations under Best Buy's corporate umbrella. At the time, Best Buy also revealed plans to penetrate the Canadian market with upward of 65 stores in the next three years.
When the deal is closed, Future Shop founder Hassan Khosrowshahi will relinquish his role as chairman and CEO. Kevin Layden, president and chief operating officer, will continue as president of Future Shop and will report to Brad Anderson, vice chairman of Best Buy. Thomas Healy, former president of Best Buy Canada, will become president of Best Buy International, also reporting to Anderson.
Given this transaction, Best Buy anticipates it will meet or exceed analysts' earnings expectations for its second quarter and fiscal year.
Future Shop reported $1.3 billion in sales for the fiscal year ended in April, an increase of 18% compared to last year. Same-store sales for the period grew 17%.
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