Richard Schulze, founder and former Chairman of the company, has submitted a written proposal to acquire outstanding shares for $24.00 to $26.00 per share in cash.
The Preferred Stock will be convertible into approximately 267 million shares of common stock of the company.
That is a bigger hurdle and one that makes a buyout a difficult proposition, because we doubt private equity companies are lining up to back this deal.
The offer is at least 36 percentmore than Best Buy’s closing price Aug.
Under the plan, Schulze, who founded the retailer under the name Sound of Music in 1966, would finance the deal through a combination of private equity investment, about $1 billion of his own equity and debt.
The rest of the money will come from what theletter calls “premier private equity firms with deep experiencein retail who are interested in a possible acquisition of BestBuy” and debt financing.
Credit Suisse, Schulze’s financial advisor, has informed him it is highly confident it can arrange the necessary debt financing, Schulze said.
Schulze’s offer is based on current public information and is subject to due diligence.
He said he has held talks with past executives who are interested in rejoining the company, including former chief executive Brad Anderson and former chief operating officer Allen Lenzmeier.
Schulze saidwhen he resigned that he would consider all options, includingselling his stake.
He lost the chairmanship after a probe by a board committee found he had failed to tell the board about allegations of personal misconduct by then Chief Executive Officer Brian Dunn.
Schulze said he made the offer public after making repeated requests to the company for the information he needed to perform due diligence on the proposal.
Best Buy has lost business due to the tendency of consumers to use its stores as a “showroom” to try out electronic products that they then purchase for less money elsewhere, often from online retailers such as Amazon.com.
Since company stores tend to have a monopoly in company towns, it was not uncommon for truck systems to emerge in isolated company towns.
“our feeling is that being private would give them more of an opportunity to experiment, try new things outside the glare of quarterly reports,” veteran industry analyst Walter Loeb said.
Jacqui McIntyre is a business journalist based in London, UK. Jacqui has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Jacqui spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.