Best Buy, one of the USA's biggest retail groups, has signed a £1.1 billion deal with Carphone Warehouse that is set to turn the mobile phone retailer into one of Europe's largest electrical retailers.

The two companies have agreed to form a new retail venture, in which Best Buy will have a 50 per cent stake, "to accelerate their growth by capitalising on the European consumer's evolving appetite for consumer electronics," according to a joint statement.

The new venture will include the whole of Carphone Warehouse's existing retail business – that is 2,400 stores in nine European countries under the Carphone Warehouse and Phone House brands – and Carphone's share of its existing relationship with Best Buy, which has already been running for nearly two years.

Also included in the deal will be Carphone's internet and direct operations as well as its insurance and airtime reselling businesses.

The Carphone Warehouse will, however, continue to own all of its fixed line telecoms interests in the UK - comprising TalkTalk, AOL Broadband and Opal - and its share of the Virgin Mobile France joint venture.

Existing Carphone Warehouse stores are not expected to change branding or format, but the joint venture will see the opening of giant superstores carrying the Best Buy branding in the UK from next year.

Best Buy and Carphone Warehouse believe growth in consumer electronics will be led by the convergence of entertainment, computing and communications products.

Best Buy has sales of $40 billion, 150,000 employees and 1,314 stores providing more than 48 million square feet of sales space in the USA, Canada and China.

Its international and chief information officer Bob Willett said of the deal with Carphone Warehouse: "We've been successful with our business model and aspire to apply that model to one of the largest markets in the world. Yet we must do so carefully and with humility.

"We have seen great companies fail because they thought they could simply export their current business model to new geographies. We intend to plan our European entry strategy carefully, focused on customer needs, and with on-the-ground help from our trusted partner, The Carphone Warehouse.”

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