Best Buy Co. (BBY:US) founder Richard Schulze is exploring taking the world’s largest electronics retailer private as he considers options that include selling his stake, according to a person familiar with the matter.
Schulze, who has a 20 percent shareholding in the Richfield, Minnesota-based company, is working with Credit Suisse Group AG (CSGN) on his plans, said the person, who asked not to be identified because the talks are private.
The 71-year-old said in May that he would step down as chairman after an internal probe found he failed to tell the board about allegations that then-Chief Executive Officer Brian Dunn was having an inappropriate relationship with a female employee. Schulze planned to leave after the company’s annual meeting on June 21. Instead, he resigned immediately on June 7 and said he’d explore options for his stake.
“We’ve been telling investors it’s a long shot that you can’t count on,” said Matt Arnold, an analyst at St. Louis- based Edward Jones & Co. While going private may speed up a turnaround, raising the billions of dollars for the transaction will be difficult, Arnold said. He recommends buying Best Buy shares based on its ability to improve results over the next three years as a public company.
A buyout of Best Buy would cost at least $30 a share to convince long-time investors to sell, Anthony Chukumba, an analyst at BB&T Capital Markets in New York, said earlier this month. That would equate to a total value of about $11 billion, including net debt.
Bruce Hight, a spokesman for Best Buy, declined to comment yesterday. David Reno, a spokesman for Schulze, declined to comment.
The retailer (BBY:US) posted a net loss of $1.23 billion on revenue of $50.7 billion for the fiscal year that ended in March, its first annual loss since 1991, data compiled by Bloomberg show. Same-store sales have declined in seven of the last eight quarters. To trim costs, the company is shutting 50 big-box locations in the U.S. this year while accelerating the opening of smaller stores to sell mobile phones.
Best Buy declined 2 percent to $18.99 at 9:43 a.m. in New York. The stock gained 4.6 percent yesterday after the Wall Street Journal reported that Schulze hired bankers to pursue a possible buyout, citing people familiar with the matter. The shares had dropped 17 percent this year through yesterday.
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