Previously, Best Buy had announced that it plans to buy back approximately $5 billion worth of shares in the next few years (original release). Best Buy has implied that the cash from the investment in The Carphone Warehouse will come from money that was originally earmarked for share repurchases (they stated as much in their announcement here). Therefore, the question is, would investors benefit more from the investment in The Carphone Warehouse, or from the repurchase of outstanding shares?
This will depend on what your valuation is for Best Buy's shares. You can think of the repurchase of its own shares as you would any other investment Best Buy makes. Is it a good use of capital? My valuation of Best Buy comes to approximately $58, and the median analyst target is $53 (according to Yahoo Finance). You can subsitute your own valuation for best buy's shares to determine the ROI from the share buyback. Using the median analyst estimate, with the share price before the announcement of approximately $44, this equates to an ROI of about 20% ($9 in value gained for every $44 spent).

Clearly, I believe the better choice would be to use that money to repurchase shares. But management has done an excellent job of getting returns on shareholder capital, so I'm inclined to allow this team to continue to make these difficult capital allocation decisions. I do still fear that management wishes to expand its empire at the expense of profitability, but on the other hand I'm hopeful they believe The Carphone Warehouse can improve its profitability with the benefits of the scale that Best Buy brings to the table. Or maybe management does not believe the shares are as undervalued as I do. It's a situation worth keeping an eye on.
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