Best Buy’s co-founder has offered to take the electronic retailer private only months after leaving as the company’s chairman.
Best Buy said it would consider former Chairman Richard Schulze’s offer but called it “highly conditional.” And analysts are skeptical his opening offer of $24 to $26 per share would get a deal done and that it would be tricky to line up investment firms to help pay for it, the Pioneer Press reported.
The last year has easily been a challenge for the Richfield-based retailer. Over that time span, it has announced a major restructuring plan and fired CEO Brian Dunn amid allegations that he had an inappropriate relationship with a female employee.
Schulze’s offer values the company at as much as $8.84 billion. Schulze already has 20.1 percent of the stock in the company, so paying for the rest of the shares would total about $6.9 billion, the Press said.
Schulze resigned in May after Dunn’s departure. A company investigation found that Schulze knew about the inappropriate relationship and failed to alert the board of human resources.
Research firm NBG Productions analyst Brian Sozzi said a deal is possible, but a challenge will be finding private equity firms to help pay for it. He also thought a higher bid is likely.
After the market closed, ratings agency Standard & Poor’s downgraded the company’s credit rating from the lowest investment grade of “BBB-“ to a junk grade of “BB+.”
"We believe that Best Buy's credit profile would weaken materially because such a transaction would add substantial amounts of debt and hinder cash flow protection measures," S&P said in a statement.
Since Dunn left, interim CEO Mike Mikan has made strong statements about how to restructure the company, focusing on services and revamping stores.
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