MINNEAPOLIS - Best Buy Founder Richard Schulze moved a step closer in his effort to take the publicly traded consumer electronics giant, private.
Schulze, 71, and the Best Buy Board of Directors reached an agreement that will allow Schulze to have access to the company's "due diligence."
"The due diligence part is to make sure that everything that is represented internally, inside the company regarding its asset base, its financial activities and any commitments that it has are understood by all parties and so there are no surprises when the actual deal, when it happens, comes about," said Christopher Puto, Ph.D, Dean of the Opus College of Business at the University of Saint Thomas.
The University's Schulze School of Entrepreneurship bears Richard Schulze's name after he made a $50 million donation to the school in 2000. It remains as the largest private donation to a Minnesota College. Puto insisted that the school has no financial ties to Schulz or to Best Buy.
"This (the due diligence agreement) is a very positive step," explained Puto. "What is going on is Dick has got a variety of investors lined up that would be a part of this buy out. The Board of Directors of Best Buy has a fiduciary responsibility, not only to the shareholders, but they have a moral responsibility to the employees, to the customers and to the areas where Best Buy operates to provide the best opportunity for that company to succeed."
Schulze said previously that the buyout would cost about $9.5 billion. Schulze would put up $1 billion of his own equity, with the rest coming from equity investment firms and private investors. Schulze has said he would offer $24-$26 a share for the stock.
Best Buy stock jumped about 7 percent briefly to $18.65 a share on the news of the due diligence agreement. However, the stock dropped to $17.87 at the close Monday.
Schulze will now be able to make a proposal to the Board to take the company private, probably in about 60 days. The Board can then take the proposal to the stockholders with a recommendation of yes or no. Schulze could take the proposal directly to the stockholders at a later meeting after January 1st. The company founder still holds about 20 percent of Best Buy stock.
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