U.S. electricals retailer Best Buy Co Inc has agreed to buy British partner Carphone Warehouse out of their fast-growing U.S. mobile phone venture for over $1 billion (£623,426), a person with knowledge of the deal said.

The deal, first reported by Sky News, is expected to be announced on Monday alongside news the venture will also close its loss-making megastores business in Britain.

The person said on Sunday that Carphone Warehouse would return some of the proceeds from the sale of its profit-share in Best Buy Mobile U.S. to investors, which include its founder and 29-percent shareholder Charles Dunstone.

Carphone Warehouse declined to comment. Best Buy could not immediately be reached for comment.

Best Buy agreed to buy 50 percent of Carphone Warehouse's retail operations for $2.1 billion in May 2008 to act as a launchpad for its expansion into Europe and to tap the British firm's expertise in mobile phones.

While Best Buy Mobile has exceeded expectations, with profits more than doubling in the year ended March, the plan for a chain of Best Buy-branded stores in Europe, has flopped.

Hit by an economic downturn, low brand recognition and stiff competition from incumbent electrical goods retailers like Dixons , the venture opened just 11 megastores in Britain before halting their expansion earlier this year.

Closing the stores, which employ around 1,000 staff, would be the latest retreat by Best Buy from international markets as it looks to focus on its main U.S. business in the face of competition from discounters and online rivals.

Earlier this year, the group exited Best Buy-branded stores in China and also dropped plans to expand in Turkey.

Analysts have said closing the megastores, which lost 62 million pounds ($99 million) in the year ended March, could cost around 50-80 million pounds.

They expect Best Buy and Carphone Warehouse to focus instead on expanding their smaller format Wireless World format stores in Europe.