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The agreement announced today clears the way for Richard Schulze to move forward with his plan to buy the consumer electronics chain and sent Best Buy shares up more than 7 percent to $18.55 in morning trading. Best Buy says the agreement will allow Schulze to get access to confidential financial statements and allow him to form an investment group with private equity sponsors to make the bid. He already owns 20 percent of the company’s stock. The retailer says the agreement establishes a non-exclusive orderly process for a bid while protecting the interests of all shareholders. Schulze says he’s pleased that an agreement was reached “which will allow him to conduct the due diligence he had sought”. Under the agreement, Schulze and his potential partners will then have 60 days to present a fully financed proposal. If Best Buy’s board reject’s Schulze’s proposal, they will have until January 2013 to present a second proposal. Best Buy’s board would have 30 days to review the second proposal before Schulze can take the offer directly to shareholders at the company’s annual meeting or a special meeting. If the second offer is turned down by both the board and Best Buy’s shareholders, he would have to wait one year before offering another proposal. In a letter to the board earlier this month, Schulze urged support for his effort to take the consumer electronics chain private, saying he’s “deeply concerned about the direction of the company”.
Related: Best Buy Suspends 2013 Forecasts Amid Sharp Q2 Income Decline
Best Buy Founder Urges Board To Let Him Proceed With Acquisition Plan
Best Buy Names Hubert Joly President And CEO
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This is going to be one stupid move. This guy is wasting his fortune buying back a doomed property. Best Buy is following in circuit city’s footsteps and everyone knows it but this guy.
Foolish.
This is good news. I’d been judging their success by the location nearest me, which is always crowded and well stock. I had to swing by their Boise location last week to replace a dead hard drive, and wow, what an eye opener. The store was dead, and I haven’t seen so much wasted retail space since CompUSA finally closed up shop. An aisle that would normally hold 15 shelves instead had 5. Not only did I have to track down an employee to help me, I had to rudely interrupt their personal conversation after politely waiting two minutes for them to acknowledge my presence and ask if I needed help. If even a third of their stores are in similar situations, this chain is in deep, deep trouble.
Here’s hoping Schulze’s “double down” strategy works, because I actually like this store, despite all it’s issues. As awesome as NewEgg and Amazon are, I’m still an old fashioned kind of guy, and like to be able to hold something in my hands before I buy it, especially expensive tech.
The problem the company is facing is well documented…people come in and use the sales help to gain info on a product and then buy it online.Unless Best Buy converts to purely an online company and wants to stay in ” brick ” stores they have to make the hired help commission sales people who will try to close the ale for Best Buy instead of being an information conveyance. I hav shopped in best Buy stores in Queens and long island and have found the employees to be extremely helpful….The displays are organized and easy to shop…..They just need to close dead stores that never should have been opened in the first place and convert to commission sales.
Actually, one of the ways Schulze proposed to win back market share from the dot coms is by price matching as closely as possible while still turning a profit, while pushing heavily services and features you can’t get from online retailers. This involves completely cleaning house at Magnolia and the Geek Squad, and making both run and feel more like Apple’s much lauded Genius Bar. Geek Squad was great when it was first purchased by the chain years ago, but over time it’s standards slipped thanks to lazy management and executives that didn’t understand the importance of customer service.
Schulze may well blow his entire fortune on this move, but I’d rather see the man allowed to take such a huge gamble and shake things up, than to slowly watch another brick and mortar retailer slowly fade away like Circuit City, CompUSA and Computer City. Unemployment is already high enough as it is for non-skilled teens and college students.