Responding quickly to a letter sent by its founder and former chairman Richard Schulze, Best Buy Co., Inc. (NYSE:BBY) said that Schulze doesn’t need the Board of Directors’ permission to name his actual private equity partners. Richard Schulze said in his letter that Minnesota law prevents him from disclosing the names of the group, and he can do it only if Best Buy Co., Inc. (NYSE:BBY) gives its approval.
The Richfield, Minnesota-based electronics retailer said in its official statement that his request to form a group and conduct due diligence is “highly conditional unsolicited indication of interest” but the Board will review the letter in due course. Best Buy further said that Minnesota laws don’t restrict Schulze from bringing forward a proposal that reveals the names of his private equity partners.
Earlier, Richard Schulze wanted to take Best Buy private by offering $24 to $26 per share, which is about 31 percent higher than the current Best Buy share price of $19.80. Schulze, who is the biggest shareholder of Best Buy Co., Inc. (NYSE:BBY) with a little over 20 percent stake, said that he is ready to roll over all of his own stake (approx $1.7 billion) into the transaction based on the agreements with the private equity partners.
Based on the prices offered by Schulze, the electronics retailer is valued at approximately $8.5 billion. Schulze proposed to finance the acquisition through his own equity, private equity firms and debt financing. In his letter sent on August 6, Schulze said that Credit Suisse Group AG (NYSE:CS) and many other major banks are interested in debt financing.
Richard Schulze said that his proposal would be a “win-win” situation for all the stakeholders involved. Shareholders will get compelling premium on their investments, and management will be in a position to take strong actions to turn around the company. Best Buy Co., Inc. (NYSE:BBY) suffered a net loss of $1.23 on sales of $50.7 billion last fiscal year.
Schulze, who started and ran Best Buy for almost 50 years, resigned from the company in June. In an internal probe, he was found to have acted inappropriately while handling the allegations about the relationship of then-CEO Brian Dunn with a female employee of the company.