Best Buy Founder Offers to Buy Retailer, Take It Private

Best Buy
MINNEAPOLIS -- Best Buy's founder said Monday that he wants to take the electronics retailer private by buying up all of its shares he doesn't already own in a deal that values the company at as much as $8.84 billion.

The news sent Best Buy (BBY) shares up 24 percent in premarket trading.

Richard Schulze also served as the Minneapolis-based company's chairman until resigning in June amid a scandal involving its CEO. Schulze said he wants to pay between $24 and $26 per share for Best Buy, which represents a 36 percent to 47 percent premium over the company's Friday closing stock price.

Based on Best Buy's 339.9 million outstanding shares, the offer values the company at $8.16 billion to $8.84 billion.

Schulze is Best Buy's largest shareholder, controlling 20.1 percent of its shares. At $26 per share, he would pay a total of about $6.9 billion for the rest of the company.

The former executive said he would have preferred to pursue a deal privately, but a deal needs to happen quickly.

"I am deeply concerned that further delay and indecision will cause additional loss of both value and talented leaders who are now uncertain of the company's future," Schulze said in a statement.

In his letter to Best Buy's board, Schulze said he's developed a plan to deal with the company's challenges and has talked with private equity firms. Schulze said he would finance the deal through a combination of private equity investments, about $1 billion of his own equity and debt.

Best Buy has been shrinking store size and focusing on its more-profitable products such as mobile phones. It's also trying to combat the so-called "showrooming" of its stores - when people browse at Best Buy but purchase electronics goods elsewhere, especially online.

In April, it announced a major restructuring that includes closing 50 stores, cutting 400 corporate jobs and trimming $800 million in costs.

The same month, then-CEO Brian Dunn left amid allegations that he violated company policy by having an inappropriate relationship with a female employee. An investigation related to the matter resulted in the ouster of founder and chairman Richard Schulze, who knew about the relationship and failed to alert the board or human resources.

In early July, Best Buy said it would lay off 600 staffers in its Geek Squad technical support division and 1,800 other store workers.



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18 Comments

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JG2003

as a former employee, i cant wait to see the ppl responsible for this mess (store management and up) lose their asses for treating employees and customers like crap.

I was encouraged to sell the product and THEN add on hundreds and hundreds of more $$$ regardless of whether the customer needed it or could afford it. It got to the point where I felt like a horrible person... but I had a child to provide for. Because I didnt buy into their ripoff I was NEVER promoted (highest PC qualifications in the store), I always had the least amount of hours and overheard managers talk about how they could "get rid of me".

The times when I, or other somewhat qualified ppl went for promotions we never got them... surprise surprise the GM's friends all got the jobs.. and sucked at them.

Good luck to all the good ppl that work there when the doors close for good.

August 07 2012 at 10:16 PM Report abuse rate up rate down Reply
kenyng

Take a walk through a FRY'S store, Best Buy can't compete.......

August 07 2012 at 12:18 PM Report abuse rate up rate down Reply
donapplebycd

"NOOOOO....I said SELL the damn stocks ...NOT buy 'em all""" ( OoooNnnnooooo)

August 07 2012 at 11:33 AM Report abuse rate up rate down Reply
Salvatore

I don't work for BB but it would be great if they could make a turn around I don't want anyone to lose their job in this economy. sounds like everyone just wants to buy on-line might work for some but where do you draw the line? hey need a alternator for my car oh that will be 3 to 7 days no problem just take a cab to work but hey saved 3 dollars oh I'm hungry can you over-nite that burger and fries. guess I'm just an Impatient person when I need something I want it now.

August 07 2012 at 10:10 AM Report abuse rate up rate down Reply
cowcomm

Bought a laptop that was not working right. I returned it and was told that it was defective by the geek squad. They replaced it, I took it home and it did the same thing as the other. I returned to the store and was trying to explain my problem to the clerk when she just turned around in my mid sentence to play with her co-worker. When I got home I called the manager on duty and explained what had happen. He said if I was not happy with my purchase to bring it back for a refund. I took him up on his offer and would you believe that after the clerk ask why I was returning it, in mid sentence she turned to listen to what her co-worker was saying and not me. I stopped talking and said that is just rude lady. She turned back towards me and was completing the transaction when a manager make a off the cuff remark about another customer ( The same manager I complained to about this) and she turned away to hear what he was saying. Best Buy, Maybe. Worst customer service for sure. You will never see another dime from me. How you have stayed in business this long is a joke.

August 07 2012 at 9:46 AM Report abuse rate up rate down Reply
thescot

here I thought he had a great idea like close the dumps down.

August 07 2012 at 5:25 AM Report abuse rate up rate down Reply
aeilerons

Check out the complaints against this behemoth nightmare!!! They actually broke our computer then lied that it had been serviced and finally faulted their warranty program...only from the customer's standpoint, They claimed there was a new program but when asked to produce a copy, their copy as well as the original were identical!!! Needless to say, they never did anything about the matter but we don't shop there and anyone we know who might be heading there to shop, we WARN them,

This company makes the MN slogan about MN Nice a sham and a shame. And don't get me started on their Goof Squad!

August 07 2012 at 5:23 AM Report abuse rate up rate down Reply
bigf963939

Beating a dead horse. I wonder what he's thinking or what meds he's on.

August 07 2012 at 5:08 AM Report abuse +1 rate up rate down Reply
johnjhenry1

Maybe if Best Buy had treated their customers better they wouldn't be having this problem. I will never buy anything there again. I look forward to the day when their doors are closed for ever, so I don't have to hear their name again. I am sure I am not the only one who feels this way.

August 06 2012 at 7:23 PM Report abuse +1 rate up rate down Reply
1 reply to johnjhenry1's comment
thescot

Amen to that, worst customer service in the country and the restocking charges are ridiculous.

August 07 2012 at 5:26 AM Report abuse +1 rate up rate down Reply
hanrod1

There is only one, very significant, report here; i.e. that the BB shares were "...up 24% in PREMARKET trading..." (emphasis added). Entirely aside from the question of how the author can know the prices paid and the percentage changes in a "premarket", where there is apparently no official pricing; HOW IN HELL CAN ANY U.S. RETAIL INVESTOR HAVE THE SLIGHTEST FAITH IN THE U.S. MARKETS, if there are "premarket" profits for a few "off market" traders, with the likelyhood of subsequent, legitimate, market losses, as a likely direct result of those INSIDER profits, before the stock is even available to the rest of us. WE MUST ALL BOYCOTT THE STOCK AND BOND MARKETS, UNTIL THEY ARE RE-REGULATED!!!

August 06 2012 at 7:07 PM Report abuse rate up rate down Reply