Richard Schulze, founder of Best Buy Co., Inc. (NYSE:BBY), considering a bid to take the troubled electronics retailer private. According to a senior Best Buy executive, the founder is recruiting executives to help him with the process.
J.D. Wilson, senior vice president of enterprise capabilities, told “He is talking to people he trusts,” and “There is a small group he’d like to have with him in righting the ship. He is serious as a heart attack.” He told further states that in June Schulze approached him with the idea, that if the deal went through he will continue to work for the company. There are rumors that apart from Wilson, the founder is also planning to recruit other executives such as the former Chief Executive Officer Brad Anderson.
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After stepping down from the post of chairman last month over allegations that he failed to disclose an inappropriate relationship between then CEO Brian Dunn with a female employee, Schulze has been thinking of taking the world’s electronics retailer private. Schulze is also considering the option of selling his 20 percent stake in the Richfield, Minnesota-based company. According to a person familiar with the matter, Schulze is yet to reach an agreement with the several former executives about rejoining the company. He has talked withto various private-equity funds and potential investors, for raising money. According to a report in New York Times, Schulze has already started working with bankers from Credit Suisse AG to consider his move.
Best Buy reported a net loss of $1.23 billion on revenue of $50.7 billion for the year. This was its first annual loss since 1991, according to data compiled by Bloomberg. Even, Same-store sales have fallen in seven out of last eight quarters. One of the main reasons for the sluggish performance is the company’s inability to retain its customers, which are migrating to other online merchants and mainly to Amazon.com, Inc. (NASDAQ:AMZN). David Einhorn mentioned in his quarterly letter that he is unsure whether Best Buy could compete versus online retailers like Amazon.com, Inc.
According to various analysts, it won’t be easy for Schulze to find private-equity firms who are willingto bear such high risk. Also, it could take at least $30 a share to convince longtime investors to sell their stake, which will cost about $11 billion, including net debt.
Schulze declined to comment on the speculation. Additionally, Bruce Hight, a spokesman for Best Buy declined to comment on the matter.