Best Buy linked to DSGi acquisition

As US giant prepares for UK launch, speculation mounts of takeover bid for incumbent market leader

Takeover talk: Best Buy is reportedly mulling a £2.2bn bid for DSGi

Just weeks before the opening of its flagship UK store, US retail giant Best Buy has been linked to a £2.2bn buy-out of rival DSG international (DSGi).

Best Buy invested more than £1bn in a joint venture with Carphone Warehouse two years ago, to the end of becoming a major player in the UK and mainland Europe. Working under the banner of Best Buy Europe, the US behemoth ultimately plans to operate 200 UK stores. A 50,000sq ft location at the Lakeside Shopping Centre in Essex is due to open next month.

The Daily Mail reports that, to aid its goal of dominating the UK consumer electronics market, Best Buy is considering a number of acquisition targets. Speculation has it that chief among those is incumbent market leader DSGi, with some predicting a £2.2bn buyout offer will shortly be tabled.

This price would represent a hefty premium. London-listed DSGi closed yesterday at 34.5p a share, and a £2.2bn offer would value the firm at 60p a share.

DSGi has been in bullish mood itself, of late, and last month announced plans to open 25 new UK megastores in time for Christmas. The Currys and PC World owner has also recently concluded a two-year portfolio review, resulting in the closure of 152 under-performing stores across Europe.

The company's share price has generally been on the up since hitting a low of less than 20p in July of last year. The firm claims money-saving initiatives have allowed it to trim £50m from its cost base during its current fiscal year, which closes at the end of this month. DSGi expects to realise the same level of savings in each of the next three years.