On Monday, Best Buy Co., Inc. (NYSE:BBY) kicked off the week with news that it had named a new CEO, Hubert Joly, formerly of the hospitality and restaurant company, Carlson Restaurants Worldwide, Inc..
Joly resigned from Carlson on Sunday, and the company subsequently announced its board chose chief financial officer, Trudy Rautio, to take over his role.
Best Buy Co., Inc. (NYSE:BBY)’s new CEO comes to the company as a “turn around” specialist for media, technology, and service companies. He had been involved in Vivendi SA (FR:VIV)’s restructuring of its videogames business and the EDS’ turnaround, which is now part of Hewlett-Packard Company (NYSE:HPQ) in France.
He is expected to take over the president and chief executive officer reins early next month, succeeding board member G. Mike Mikan, who has been the company’s interim CEO since April.
Upon Joly’s arrival, which will requre a visa for the French citizen, Mikan will continue serving as a board member, but he will become the chairman of the audit committee, reported the Wall Street Journal.
Joly comes to Best Buy Co., Inc. (NYSE:BBY) as the company has faced declining sales and ongoing efforts by the company’s founder Richard Schulze to take the company private.
On Monday, Reuters reported that Schulze had not accepted a board offer to undergo due diligence in response to his proposal to take the company private with its $8 billion-plus valuation.
Earlier in the month, Schulze had expressed interest to partner with private equity firms, to purchase the company for $24 to $26 per share. He owns approximately 20 percent of Best Buy’s shares and had said he’ll fund the deal via investments from private equity firms, a $1 billion reinvestment from his personal equity, and debt financing.
Best Buy’s board responded by giving its advisors authority to begin talks with Schulze, giving “great flexibility” to structure an agreement.
Almost from the get-go, he has faced challenges for an official bid, including a section in Minnesota law that would not allow him to work with private equity firms and his inability to gain access to the company’s financial numbers.
Schulze has been given 60 days by the company to produce a deal, including an opportunity to present a buyout offer to shareholders.
A company statement said, “Mr Schulze did not accept the company proposal.”
Schulze has not publicly commented, but Reuters reported that a source said the founder and his team were “shocked” by Best Buy’s statement as they believed talks were continuing over a due diligence agreement.
Best Buy had previously said Schulze’s proposal was “highly conditional;” they had also requested he name his private equity partners.
Don’t expect Schulze to go away. Just last week, he sent a second letter to the company’s board, stressing his persistence. He said, “I still hope to work with the board on a mutually beneficial transaction – but you should know that I am not going away.”
This is the drama that Joly will inherit when he takes over in September. Will his arrival be a good or bad thing for the company? I think it will be a good thing, as he may act as a neutral part and perhaps a voice of reason. Expect this ongoing drama to take a possible toll on the company.
