Best Buy Buyout Bid Talks Said To Resume
Talks between Best Buy and its founder, who has expressed interest in buying back the company, are reportedly back on, after a brief hiatus.
Earlier this month, Best Buy Founder Richard Schulze announced an offer to buy back the company he started in 1966 under the name Sound of Music. The offer, estimated at $8 billion,was for a price of $24.00 to $26.00 per share in cash.
Best Buy has since released its quarterly earnings report, which included a 90% drop in net income. Best Buys stock, likewise, has been on the downward trend, though it’s up a bit from yesterday, currently at $17.91 as of the time of this writing. Well below Schulze’s offering price.
A week ago, Schulze sent the Board Of Directors a letter affirming his commitment to the offer, but Best Buy put out a press release on Sunday, saying that it had offered a Due Diligence plan to Schulze, but that he had declined. The release said:
On Friday, Aug. 17, the Board convened to evaluate Mr. Schulze’s indication of interest in the company. The Board authorized its advisers to initiate discussions with Mr. Schulze on a cooperation agreement that would establish an orderly process under which Mr. Schulze would both gain access to certain financial, operational and legal information and be able to move forward with discussions with private equity partners and debt financing sources, as he had requested.
Included in the proposal was a routine and customary request that Mr. Schulze agree to certain protections for Best Buy and its shareholders, with the goal of limiting outside distractions, in return for access to non-public information and the ability to form an investor group.
Best Buy said it would have provided: a waiver of Minnesota law, in order to provide Schulze the ability to work with his private equity partners to develop a definitive proposal for the outstanding shares of the company, due diligence access to Schulze to the company’s non-public info, due diligence access for his private equity partners, due diligence access for his advisers and debt-financing sources, and an opportunity to bring forward a fully financed proposal within 60 days.
Bloomberg reports today, that Best Buy, which has since appointed Hubert Joly to the CEO position, has resumed talks with Schulze about an agreement that would enable him to conduct due diligence. The publication cites “two people with knowledge of the matter.”
According to Bloomberg, Schulze had resisted Best Buy’s previous offer because of unspecified restrictions, according to “people familiar with the negotiations.”