Best Buy Does Not Receive An Offer To Go Private

Posted Mar 1, 2013

Best Buy has not receive an offer from Richard Schulze to buy out the company and take it private. The deadline was scheduled for yesterday. The talks ended after Schulze and private equity investors sought 3 board seats in exchange for buying a minority stake in Best Buy according to sources with Bloomberg.  Schulze proposed buying Best Buy for $24-$26 per share in August.  However he was unable to line up debt and equity financing.

Schulze was supposedly in talks with Cerberus Capital Management LP, TPG Capital, and Leonard Green & Partners.  Schulze is Best Buy’s largest shareholder with a stake of about 20%.  He wanted to take over the company that he founded over 40 years ago.  Schulze resigned as chairman this past June.  Best Buy’s current CEO Hubert Joly has stabilized sales and has shut down several locations.

It may be possible that Schulze comes back with a last-ditch proposal, but it will be rather difficult unless the private equity companies become compelled enough to work with him on the deal.  Schulze stepped down after he failed to inform the board about allegations that the CEO at the time was having an inappropriate relationship with an employee.

During a standstill agreement, Schulze was able to conduct due diligence.  Best Buy also offered Schulze two board seats if he refrained from going directly to shareholders with a proposal or if he did not violate the standstill provisions between both parties.