Best Buy founder exploring options with Wall Street bank - KMSP-TV

Source: The Wall Street Journal

Best Buy Co. founder Richard Schulze is working with Wall Street bankers to explore taking the electronics retailer private, according to people familiar with Schulze's thinking.

The company's largest shareholder, Schulze controls slightly more than 20 percent of Best Buy stock. He abruptly resigned his post as chairman and director at the Richfield, Minn., company earlier this month, saying he was pondering options for his stake.

Though he was expected to leave the board next year, the quicker move allowed him to explore a buyout of the company, which he couldn't have done had he remained a director, the people familiar with his thinking said.

Schulze could also sell his stake, which has a market value of about $1.4 billion. But his preference is to take the company private, said the people. They added that the process of looking for potential buyout partners is in early stages and there's no certainty he will find like-minded investors. Schulze is working with bankers from Credit Suisse Group, they said.

Best Buy had earlier said Schulze would step down as chairman this month and leave the board next year. His departure was scheduled after an internal investigation found that he knew of an alleged affair involving former CEO Brian Dunn and a subordinate, but failed to notify other members of the board.

In a statement released by the company in May, Schulze said: "I understand and accept the findings of the audit committee."

Best Buy has an enterprise value of about $8 billion. Enterprise value is a company's stock market value plus its debt, minus any cash on hand. A buyout offer would likely have to approach $11 billion to entice other shareholders to sell, analysts say.

Schulze, who was Best Buy's CEO for 36 years until 2002, doesn't want to return to run the company, the people familiar with the matter said.

Best Buy is the world's largest electronics retailer by revenue. The company's cash flow of about $2 billion a year could be attractive to private-equity firms, which tend to target businesses with dependable revenues that they can use to make payments on the debt used to finance buyouts.

Schulze didn't immediately respond to requests for comment. A Best Buy spokesman declined to comment. A Credit Suisse spokesman declined to comment on the matter.

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