Best Buy Co. Inc. (NYSE: BBY) former board member and company’s founder Richard Schulze has offered to buy struggling electronic retailer.
As more and more consumers prefer buying electronic goods online, Best Buy, a traditional brick & motor retailer has found the going very tough in the recent past.
During the last year, reeling under financial pressure, the retailer announced a major restructuring plan even as it fired its CEO. Back in 2009, one of its rivals, Circuit City went bankrupt as it could not suffice changing buyers’ habits.
On Monday, Schulze offered to buy out Best Buy for $8.84bn. Currently, Schulze holds 20.1% stake in the company and paying for remaining shares will mean nearly $6.9bn.
Following the news, shares of Best Buy rallied, gaining 10% in the morning trade.
Earlier in May, Schulze resigned as a Company’s Chairman following a disgraceful conduct involving Company’s former CEO Brian Dunn. The CEO was ousted amid allegations that he abused company’s policy by keeping an inappropriate relationship with a female employee. According to investigations, Schulze was aware of all these but failed to alert the board or Company’s human resources department.
Even though Schulze was suppose to stay on the board as a director of the company until shareholders’ meeting in June, he resigned suddenly much before his tenure, saying that he was exploring more options for his increasing his stake in the company. Analysts at that moment were quick to point out that bidding was in the offing.
Schulze in a statement said “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 ways; 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.”
Schulze disclosed that he wants to offer between $24 and $ 26 a share which is a premium of between 36% and 47% on Friday’s closing price.
The company has 339.9 million outstanding shares and the current bid values the company between $8.16bn and $8.84bn.
Commenting over the offer, Best Buy’s board said that it (bid) came in public letter and was addressed to the board. The board also said that despite the letter was “unsolicited and highly conditional”, it will consider the proposal.
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