updated 11:56 pm EDT, Mon August 27, 2012
Previously rebuffed ex-CEO has 60 days to make first proposal
Founder and former CEO Richard Schulze and Best Buy report that they have come to an agreement that will allow Schulze to continue the attempt to buy the beleaguered electronics retailer. The agreement will allow Schulze access to confidential financial data and allow him to form an investment group with private equity to make the bid to supplement the 20 percent of stock he already owns.
Earlier this month, Schulze suggested he could pay between $24 and $26 per share for the chain, and Best Buy was allegedly considering the deal. When talks broke down, Best Buy named recovery expert Hubert Joly as CEO, a move which was not well-recieved by shareholders.
Under the terms of the agreement, Schulze and his partners will have 60 days to present a fully-financed proposal. If the Best Buy board rejects the proposal, the group will have until January 2013 to present a second proposal. The board will then have 30 days to review the updated proposal -- when the deadline expires, Schulze can take the offer directly to shareholders at an annual meeting or special meeting. If the offer is again refused, another proposal cannot be offered until 2014.
Electronics retailer Best Buy has suspended profit forecasts and share buyback programs for the remainder of calendar year 2012 to give Joly time to build a turnaround plan for the company. The move comes just days after the naming of a new CEO and weak quarterly earnings caused by continued financial challenges in markets Best Buy serves.
Best Buy has commenced a plan to save $800 million by its fiscal 2015 that would see it close 50 of its "big-box" stores during its fiscal 2013, which started at the beginning of March. The retail chain expected these and other cost savings to cut $250 million in 2013 and $300 million in costs just in retail by the 2015 target.
Other focus shifts in an attempt to save money include fewer large-screen televisions stocked, a reduction in the DVD and CD aisles, and an increase on tablets, e-readers, and mobile phones, emphasizing Best Buy's existing strengths in marketshare over its competitors. The alterations in strategies are an attempt to to lure in customers, reversing a downward trend of store visits. Shoppers today visit Best Buy twice a year on average, rather than 10 times a year as they did a decade ago.