Carphone Warehouse is to sell a 50 percent stake in its retail unit for 1.1 billion pounds ($2.2 billion) to consumer electronics retailer Best Buy and the two groups will launch a new company.
Europe's biggest independent mobile retailer Carphone said the proceeds of the sale would be used to pay down debt and invest in its remaining broadband customer growth and infrastructure.
On completion of the transaction, Carphone and Best Buy will each own 50 percent of the retail business, comprising all the 2,400 stores, the Web and direct businesses, the insurance operations and its airtime reselling businesses.
Carphone continues to own all of its fixed-line telecoms business in Britain.
The announcement follows months of speculation about a tie-up between the two companies after Best Buy took a small stake in the British company.
They also have a joint venture in the United States.
The transaction will be subject to approval by Carphone shareholders but directors of the company have unanimously agreed to vote in favor of the resolution to be held at the extraordinary general meeting scheduled to take place by early August.
"We are joining forces with a leader in consumer electronics retailing to enter a major new market together," Carphone Finance Director Roger Taylor said in a statement.
"Best Buy's track record of value creation speaks for itself. In addition, the proceeds from the transaction give us the power and flexibility to maximize the value of our fixed line business and enhance its scale and profitability."