Best Buy founder Richard Schulze has offered to buy out the struggling retailer, first reported by Bloomberg’s Jeffrey McCracken and Chris Burritt.
Schulze sent a letter to the company’s board of directors this morning offering $24 to $26 a share, a 30 per cent premium to the stock’s Friday close.
At the high range of his offer, Best Buy would be valued as much as $8.84 billion.
Schulze is Best Buy’s largest shareholder and currently holds 20.1 per cent of the firm.
The electronics store founder exited Best Buy earlier this year after it was revealed he did not notify the company’s board of directors of a relationship between the company’s then CEO, Brian Dunn, and a subordinate.
“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,” 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.”
Schulze, who is being advised by Credit Suisse, said he will pursue a cooperative take over and work with Best Buy’s current board.
Already, the company’s founder — who had been with the firm for 46 years — has requested due diligence and consent forms from Best Buy.
“While I preferred a private negotiation, time is of the essence,” he says. “I am deeply concerned that further delay and indecision will cause additional loss of both value and talented leaders who are now uncertain of the company’s future.”
Earlier this month, reports surfaced that Schulze had started recruiting executives to lead the company if he was able to finance the privatization of Best Buy.
Shares are up more than 21 per cent in pre-market trade, to $21.88.
Best Buy’s Struggles
Best Buy has rapidly been trying to turn its operations around as it has seen peers CompUSA and Circuit City fail. Consumers have been using its locations as a testing ground for products before making final purchases at competitors like Amazon and Walmart.
The company has targeted more than $800 million in cost savings over the next three years, largely through layoffs and store closings.
Already Best Buy has said it would cut more than 2,400 jobs and close 50 stores in the U.S.
The company is betting its future largely on mobile and the commission it is paid by wireless carriers to activate services. By 2016 it hopes to have as many as 800 mobile-only locations, up from 305 today.
In November of last year, the Richfield, Minnesota, based company bought out Carphone Warehouse’s stake in it’s U.S. cellular operations for $1.3 billion and said it would close its U.K. big-box locations to focus on smaller mobile outlets.