Best Buy founder offers to take retailer private

BEST BUY founder Richard Schulze, who stepped down as chairman in June, has offered to take the electronics retailer private at $24 to $26 a share.

Credit Suisse Group, Schulze’s financial adviser, is confident it can obtain financing for an offer, according to a letter sent to the board yesterday. The offer is at least 36 per cent more than Best Buy’s closing price last Friday, and the midpoint of the range gives the company an equity value of $8.5 billion.

Schulze, who held more than 20 per cent of Best Buy as of June, plans to contribute $1 billion in equity from that stake, the letter shows. The rest of the money will come from what the letter calls “premier private-equity firms with deep experience in retail who are interested in a possible acquisition of Best Buy” and debt financing.

The Richfield, Minnesota-based electronics chain had about $1.7 billion in long-term debt as of May 5th, according to regulatory filings.

Best Buy confirmed in an e- mailed statement that it had received the letter from Schulze and said its board would consider it “in due course.”

Through a spokesman, Schulze declined to comment on the letter. He is seeking the board’s permission to conduct due diligence on the electronics retailer and form a group including private-equity funds and other executives that would make a more complete offer.

Under Minnesota corporate law, Schulze needs permission from company directors to form such a group. His offer will have no deadline as yet, and it is subject to being able to conduct due diligence.

Schulze has negotiated unsuccessfully with the board for the past several weeks, seeking permission to conduct due diligence and form a bidding group, said a person familiar with the matter. Best Buys board is believed to have told Schulze it wasn’t a good time to go private because it was looking for a new ceo, and asked for three more weeks to consider the matter. Schulze, who spent almost half a century with the company, resigned as chairman in June after an internal probe found he acted inappropriately in handling allegations about then-ceo Brian Dunn’s relationship with a female employee. – (Bloomberg)