Carphone Warehouse's deal with Best Buy of the US is noteworthy for two reasons. First, because of the curious way the deal has been structured. Second, because it could pave the way for a radical change in the way consumer electronics are sold in Britain and on the Continent.

On the surface, Carphone looks unchanged. The existing shareholding and boardroom structure is preserved. Charles Dunstone, the founder, remains chief executive and is not selling a single share, keeping his 33 per cent stake.

Open the back of the handset, however, and Carphone is being partially hollowed out. Half of the core operating business, a network of 2,400 shops, will be handed over to Best Buy. In return Carphone gets £1.1 billion in cash, which will be used to pay down its uncomfortably high debt levels and also to invest in its other division - telecom services.

For Carphone shareholders, the deal reduces the leverage risk, reduces exposure to the maturing core business but ups the diversification risk a notch. Mr Dunstone, an entrepreneur always willing to take big bets, now has the firepower to push much more aggressively into telecoms services.

For Best Buy, the advantage of this deal is that it has not had to pay a premium for control of Carphone; nor does it have the distraction or worry of what to do with the telecom services arm. The terms look reasonable for BB, whose earnings per share this year will be enhanced; Carphone's will be depressed.

The other possible downside for Carphone shareholders is that it now contains a poison pill. Because of Mr Dunstone's stake Carphone was always protected from unwanted approaches, but it is now entirely shielded, with Best Buy alone being in a position to bid. That may be a price worth paying for having the financial firepower and buying clout of one of America's biggest retailers by your side, but Carphone shareholders may need a little convincing.

Best Buy's plans to sell a vast array of electrical goods from giant emporia in Britain and Europe is also untested. The chance to see and feel a wide range of goods in every product category in one store has until now been largely denied to British consumers. If Best Buy can bring the razzmatazz and service philosophy of its US stores to Britain, and combine it with Carphone's reputation for impartial advice, they could be on to a winner. Curry's and Comet have hardly set the bar high.

But the business graveyard is full of the corpses of good local retailers that simply could not thrive when transplanted to foreign climes. And Best Buy, though a formidable force in North America, is a novice almost anywhere else.

patrick.hosking@thetimes.co.uk

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