Best Buy may be taken private by ex-chairman

Deal values largest consumer electronics chain at $8.16b

Best Buy Co Inc founder Richard Schulze on Monday offered to take the struggling US electronics retailer private in what could be the biggest leveraged buyout of the year.

The offer comes less than three months after Schulze was forced out as chairman for failing to report allegations of personal misconduct by the then-CEO.

The deal values the world’s largest consumer electronics chain at $8.16 billion (Dh30.01 billion) to $8.84 billion, or $24 to $26 a share — a price tag that many on Wall Street deemed inadequate.

Best Buy shares were up 11.5 per cent at $19.67 on Monday afternoon, still well below the proposed offer price range, reflecting investor scepticism that the deal would get done. “It is a different conversation if it is at least $30 a share and you have got your equity financing lined up and you have got your debt financing lined up. That is where shareholders, I think, might say ‘You know what, let’s just take the money and run,’” said Anthony Chukumba, analyst at BB&T Capital Markets. BB&T Capital Markets expects to receive or intends to seek compensation for investment banking services from Best Buy in the next three months.

The offer by the former Best Buy chairman, who owns 20.1 per cent of its stock, represents a premium of 36 to 47 per cent over the stock’s closing price of $17.64 on Friday.

Best Buy has been closing stores, cutting jobs and trying out a new store format to try to improve its business.