Best Buy Co. said it would consider the offer but called it “highly conditional.” And analysts are skeptical that former Chairman Richard Schulze’s opening offer of $24 to $26 per share would get a deal done and that it could be tricky to line up investment firms to help pay for it.
It’s the latest twist in the Minneapolis company’s struggles to stay relevant as more people buy electronics online. Over the past year, it has announced a major restructuring plan and fired CEO Brian Dunn amid allegations that he had an inappropriate relationship with a female employee.
Best Buy is trying to avoid the fate of its rival Circuit City, which went bankrupt in 2009, partly because of changing shopper habits.
The offer values the company at as much as $8.84 billion. Schulze already has 20.1 percent of the stock in the company, so paying for the rest of shares would mean coming up with about $6.9 billion.
Schulze resigned as chairman in May, after Dunn’s departure. A company investigation found that Schulze knew about the inappropriate relationship and failed to alert the board or human resources.
Schulze had been expected to stay on the board until the company’s annual shareholder meeting in June, but he resigned unexpectedly before the meeting and said he was exploring options for his hefty stake in the company. Analysts had been expecting a possible bid since that announcement.
“Immediate and substantial changes are needed for the company to return to its market-leading ways,” Schulze said in a statement. “It is my strong belief that Best Buy’s best chance for renewed success is to implement with urgency the necessary changes as a private company.”
Schulze’s offer would represent a 36 percent to 47 percent premium over the company’s Friday closing stock price.
Schulze said he would have preferred to pursue a deal privately but went public with the offer for the sake of speed.
“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.
Schulze, 71, opened his first store called the Sound of Music in St. Paul, Minn., in 1966. He expanded the chain to nine stores in Minnesota by 1983 and renamed it Best Buy.
The company revolutionized the electronics business, operating warehouse-style stores and putting all inventory on store floors, rather than keeping it in back rooms.