Best Buy Co said founder Richard Schulze declined an offer from the board to conduct due diligence and go to shareholders with his offer to take the electronics retailer private.
The board proposed that Schulze, beginning in January, be allowed to take his buyout offer to shareholders, should the board decide to reject any definitive proposal to acquire shares, the retailer said in a statement yesterday. Schulze did not accept the proposal, according to Best Buy.
In a letter last week, Schulze requested the board allow him to form a group to support his proposal to acquire Best Buy for US$24 to US$26 a share. Schulze, who held more than 20 percent of Richfield, Minnesota-based Best Buy as of June, plans to contribute at least US$1 billion in equity from that stake.
“The board proposals were offered in good faith, consistent with the board’s fiduciary duties to all shareholders and its commitment to good governance practices,” Best Buy said.
The retailer has picked Hubert Joly, chief executive officer of hospitality company Carlson, as its new CEO, the Wall Street Journal and the New York Times reported. Joly had quit for other opportunities, Carlson said in a statement.
Best Buy in April disclosed the departure of CEO Brian Dunn amid a board investigation into his “personal conduct.”
Best Buy’s board initially demanded that Schulze agree to a standstill of 18 months during which he would not go directly to shareholders or call a special shareholder meeting, according to a person familiar with the discussions.
After Schulze rejected that demand, the two parties continued negotiations over the weekend, said the person who declined to be identified because the talks were confidential.
“We were in the process of negotiating an acceptable standstill period when, without notice to me or to any of my advisors, the board issued its announcement,” Schulze said in a separate statement. “I am shocked by this course of action.”
An 18-month standstill agreement proposed by the board was unacceptable because the retailer needs “urgent change,” the statement said.
Schulze said he was disappointed by Best Buy’s termination of discussions and remains hopeful the board will engage in talks to protect shareholder interests, the statement said.
Bruce Hight, a spokesman for Best Buy, said the company will not comment beyond its statement.