RICHFIELD, Minn. - Best Buy founder Richard Schulze has made it official. He wants his company back. Schulze resigned as Chairman in June following the scandal are resignation of CEO Brian Dunn.
Schulze sent Best Buy's Board of Directors a letter outlining his intentions. Schulze is Best Buy's biggest stockholder with more than 20 percent of the shares. He intends to purchase the remaining shares at $24-$26 per share. If so, the company would be valued at more than $8.5 billion, making it the largest taking of a retail firm private.
Schulze indicated that $1 billion dollars would be his own money. The remaining amount would come from unnamed private equity firms. The vagueness of Schulze's offer has left analysts wondering.
"Typically, getting the highly confident letter is a big part of the financing," commented Andrew Winton, finance professor at the Carlson School of Management. "But you also want to know which private equity fund is going to be involved. Presumably, the Board is going to want to see a lot more before they make a decision."
Brian Dunn resigned in the midst of a scandal involving an inappropriate relationship with a Best Buy staffer. Winton wondered if that event factored into Schulze's decision to attempt to retake the company.
"Schulze handled [Dunn's situation] directly instead of going to the Board," said Winton. "So, maybe there is some bad blood over that."
Best Buy declined requests for an interview on Monday, but issued a statement. "Best Buy...confirmed today that its Board of Directors has received a letter requesting due diligence and outlining an unsolicited, highly conditional indication of interest from Richard Schulze, former Chairman of Best Buy, to acquire all of the outstanding shares of Best Buy that he does not already own for a per-share price of $24-$26. This has come through a public letter addressed to the Board.
"Best Buy's Board of Directors will review and consider the letter in due course, consistent with its fiduciary duties..."
Best Buy stock jumped by 22 percent on news of Schulze's plans, but settled back to close at $19.99 per share on Monday.
The offer represents a 36 percent to 47 percent premium over Best Buy's Friday closing stock price.
Best Buy's full statement reads as follows:
Best Buy's Board of Directors will review and consider the letter in due course, consistent with its fiduciary duties, in consultation with its financial advisors, Goldman, Sachs & Co. and J.P. Morgan and its legal advisor, Simpson Thacher & Bartlett LLP. Best Buy said that its Board of Directors will evaluate this proposal carefully and will, as always, pursue the best course for its shareholders.
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