When Best Buy founder Richard Schulze stepped down as chairman in June earlier than everyone had expected after allegations he’d handled CEO Brian Dunn’s alleged involvement with an employee poorly, he said he would consider options for his 20.1% stake in the company, including the logical step of selling it off. Which is why he’s causing yet another mini-stir by reportedly very seriously considering buying back the company and taking it private.
There are a lot of ifs, maybes and “how’s abouts we take a look at things?” going on, according to Bloomberg, but here’s the gist: As we all know, Best Buy isn’t doing too well these days when it comes to competing with online retailers like Amazon or causing a kerfuffle over executive bonuses. Schulze, it seems, thinks he can turn things around by buying out Best Buy, and is taking the steps to get financial backing to do so.
His financial advisers at Credit Suisse sent a letter to the company’s board today saying Schulze would likely buy Best Buy for around $24 to $26 per share, which is more than its closing price as of Aug. 3.
Part of the money will come from $1 billion in equity in Schulze’s stake in the company, says the letter, while the rest will be from “premier private-equity firms with deep experience in retail who are interested in a possible acquisition of Best Buy” and debt financing.
“I have been actively exploring all available options for my ownership stake,” Schulze, 71, said in the letter. “That exploration has reinforced my belief that bold and extensive changes are needed for Best Buy to return to market leadership and has led me to the conclusion that the company’s best chance for renewed success will be to implement these changes under a different ownership structure.”
Schulze needs permission from the board before he can start performing due diligence and collect the financial backers he’ll need around him, under Minnesota corporate law. In the letter, Schulze says he’s confident that he’ll accomplish due diligence quickly and will be able to reach an agreement to buy Best Buy.
He reportedly hasn’t had much luck with the board so far, after asking for permission to go ahead with his research and form a bidding group in the last several weeks. The company’s board told him it’s looking for a new CEO, asking if he could maybe chill on this for three weeks.
According to the Wall Street Journal, Best Buy confirmed receiving Schulze’s letter, and called it “an unsolicited, highly conditional indication of interest” on the part of the founder.
Meanwhile, other former executives are also said to be interested in getting the gang back together, including former Best Buy Chief Executive Officer Brad Anderson, former President and Chief Operating Officer Allen Lenzmeier and J.D. Wilson, former senior vice president of enterprise capabilities.
WHen interviewed in July about Schulze’s interest in bringing Best Buy back into his arms, Wilson said, “There is a small group he’d like to have with him in righting the ship. He is serious as a heart attack.”