Sanjay Singh, formerly of Abercrombie & Fitch and Procter & Gamble, will head up a new data-analysis business unit.
Richard Schulze's proposed deal is valued at between $8 billion and $9 billion.
After weeks of speculation in the press and on Wall Street, Best Buy Co. founder Richard Schulze has made it official: He wants to own the consumer electronics retailer as a private company.
In a deal valued at between $8 billion and $9 billion, Schulze has made an offer to the Best Buy board of directors to acquire all outstanding shares of stock for between $24 and $26 per share in cash.
Schulze, who opened his first Sound of Music store in 1966 and launched the first Best Buy store in 1983, resigned as Best Buy’s chairman in June but still owns about 20% of the stock of Best Buy, No. 11 in the 2012 Internet Retailer Top 500. “There is no question that now is the moment of truth for Best Buy and that immediate and substantial changes are needed for the company to return to its market-leading way,” Schulze says. “After assessing all of my options, it is my strong belief that Best Buy’s best chance for renewed success is to implement with urgency the necessary changes as a private company. It is my strong preference to pursue an acquisition cooperatively with the Best Buy board of directors.”
Best Buy acknowledged the offer. “The board will consider the letter in due course consistent with its fiduciary duties,” Best Buy says.
Schulze resigned as chairman of Best Buy in June following a scandal that saw the company replace CEO Brian Dunn for inappropriate behavior with an employee. G. Mike Mikan took over as interim CEO.
Since June, Schultze has been lining up investors and former Best Buy senior executives such as Brad Anderson, a former CEO and vice chairman, and Allen Lenzmeier, a former president and chief operating officer. Schultze has retained Credit Suisse as his financial advisor.
“The transaction would be financed through a combination of investments from private equity firms, my equity investment of approximately $1 billion and debt financing,” Schulze says in a letter to current chairman Hatim Tyabji, which Best Buy has now released in a new filing with the U.S. Securities and Exchange Commission. “Based on significant work done to date Credit Suisse is highly confident it can arrange debt financing.”
In addition to its CEO scandal, it’s been a tough couple of years for Best Buy, which continues to lose business to Amazon.com Inc. and other web-only merchants.
Best Buy will release its second quarter earnings Aug. 21. For the first quarter ended May 28, online sales rose 12% year-over-year but:
- Total sales increased just 2.2% to $11.61 billion from $11.36 billion.
- Comparable-store sales decreased 5.3%.
- Net earnings decreased 25.5% to $158 million from $212 million
Best Buy also is in the midst of an $800 million restructuring program, which includes closing up to 50 full-size stores.