By Claire Reilly
The founder of one of the largest consumer electronics retailers in the United States, Best Buy, has announced his intention to buy-out the entire company for USD $10 billion (AUD $9.48 billion).
Richard Schulze founded the company in 1966 (then known as The Sound of Music), opened the first Best Buy-branded store in 1983 and was a member of the board until he stepped down on 7 June. In a letter addressed to the current chairman of the board, Hatim Tyabji, Schulze said he had “been actively exploring all available options” for his ownership stake since his departure.
“That exploration has reinforced my belief that bold and extensive changes are needed for Best Buy to return to market leadership and has led me to the conclusion that the company’s best chance for renewed success will be to implement these changes under a different ownership structure,” he wrote.
According to this letter, released to the New York Stock Exchange on 6 August, Schulze has communicated with several private equity firms and “highly-regarded former Best Buy senior executives” regarding the acquisition and, subject to due diligence, is proposing to acquire all the common stock of Best Buy for a cash purchase price of USD $24-26 per share.
“This represents a very compelling opportunity for Best Buy Shareholders,” he wrote.
“I cannot emphasise strongly enough how much I believe in Best Buy and its future, and how much I would welcome the opportunity to do what is best for shareholders and Best Buy. I believe there is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’s customers and building pathways to the next generation of consumers.
“I feel that the transaction I am proposing would be a ‘win-win’,” he added.
The Best Buy board released a same-day response to the letter via the NYSE, calling it “an unsolicited, highly conditional indication of interest” from Schulze, and saying that the company would consider the offer “in due course”.