NEW YORK – Best Buy Co. and its founder and former chairman Richard Schulze say they have an agreement that will allow Schulze to pursue his plan to try to buy the nations largest consumer electronics chain.
The news sent Best Buy shares up 3.2 percent to close at $17.87 Monday.
Best Buy said the agreement will allow Schulze to get access to confidential financial statements and allow him to form an investment group with private equity sponsors to make the bid. He already owns 20 percent of the companys stock.
The agreement is the first step toward Schulze making an official bid for the company, as Best Buy tries to turnaround results and adjust to a new CEO. Earlier this month, Schulze suggested he could pay $24 to $26 a share for the chain. Best Buy had said it was considering the overture. The talks stalled a week ago, with the two going back and forth in public exchanges.
The retailer says the agreement establishes a non-exclusive orderly process for a bid while protecting the interests of all shareholders. Schulze says the agreement will allow him to examine the companys books in detail.
Under the agreement disclosed Monday, Schulze and his potential partners will then have 60 days to present a fully financed proposal.
Analysts say the agreement is a step in the right direction for Schulze.
(Schulze) had a zero probability of raising equity without due diligence, and now that zero is up to a 15 or 20 percent chance, Wedbush Securities analyst Michael Pachter said. Private equity firms want to understand their investment and return, and in order to understand that you have to be able to look at the books.
If Best Buys board rejects Schulzes proposal, it will have until January 2013 to present a second proposal. Best Buys board would have 30 days to review the second proposal before Schulze can take the offer directly to shareholders at the companys annual meeting or a special meeting. If the second offer is turned down by both the board and Best Buys shareholders, he would have to wait one year before offering another proposal.