Best Buy founder Schulze gets 30 day extension on his bid deadline to conduct due diligence

posted by Alan F.

Dec 15, 2012, 1:20 AM

Best Buy founder Schulze gets 30 day extension on his bid deadline to conduct due diligence

Best Buy founder and former CEO Richard Schulze is seeking to buy out the troubled big box retailer. On Friday, Best Buy gave Schulze an extension of 30 days to do due diligence (alliteration alert) before deciding whether or not to enter a bid for the electronics seller. The new deadline for Schulze is February 28th which will allow him to see how well Best Buy does over the holiday season.

Best Buy's founder wants to buy the company

Three private equity firms are working with Schulze to put together an offer for Best Buy, which is expected to be one of the largest takeover bids in the last few years. After a bid is made, Best Buy's board of directors will have 30 days to mull over the offer and make a final decision on whether or not to accept it.

The original agreement between Schulze and his brainchild was signed by both parties on August 26th, and allowed the chain's founder to access certain Best Buy information in order to conduct due diligence and gave him permission to form an investment group to make a fully financed bid for the company.

"Both parties believe that allowing Mr. Schulze to bring his offer after the holiday season and fiscal year end is in the best interests of shareholders and provides Mr. Schulze and his potential partners with an opportunity to include the Company’s full year results as part of their due diligence review. Accordingly, Best Buy and Mr. Schulze have mutually agreed that Mr. Schulze will have the opportunity to deliver the proposal to the Board of Directors on or after February 1, 2013 through February 28, 2013. The Board would, within 30 days, review and take a position on any such offer, consistent with its fiduciary duties and in the best interests of shareholders. There is no guarantee that Mr. Schulze will present an offer, or that such an offer would be accepted by the Board of Directors."-Best Buy

source: BestBuy via BGR

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10 Comments

3. squeeb

Posts: 99; Member since: Dec 02, 2011

Ah...Best Buy...the amazon.com show room.

posted on Dec 15, 2012, 12:42 PM 1

2. networkdood

Posts: 6330; Member since: Mar 31, 2010

The problem with Best Buy is that they have appliances - get rid of the appliances and you will have more space to offer a greater selection of PCs, PC accesories, cameras, and you can even have more room for your 'mobile store' within a store - become an actual electronics/tech store. Expand on computer selection because every year they have a poorer selection of desktop PC. Lower the prices on software - I can get it cheaper at Target or Amazon or Walmart - those 3 companies are Best Buy's main rivals - if they can improve their pricing/selection and redesign their ugly website (and give it better pricing), then they have a chance to get better. Also, if you offer extended warranty - fully explain the process with the Black TIE warranty and make sure those people are trained properly for improved customer service over the phone.

posted on Dec 15, 2012, 10:55 AM 2

4. tigermcm

Posts: 861; Member since: Sep 02, 2009

they always price match so I don't see an issue with pricing

posted on Dec 15, 2012, 1:16 PM 0

5. nak1017

Posts: 328; Member since: Jan 08, 2010

Floor space costs money and appliances waste a lot of it. They compete with Homedepot in that category and can't hope to match them in either price or selection...

posted on Dec 15, 2012, 1:48 PM 1

6. networkdood

do not just match when asked - hardly anyone actually does the price match - they just need to lower their prices.

posted on Dec 15, 2012, 2:16 PM 0

7. lsutigers

Posts: 832; Member since: Mar 08, 2009

The problem with offering more and more PC's is that they don't offer good margins. In fact Best Buy, and Circuit City when they were around, actually lost money selling PC's, that's why they always pushed the Geek Squad / Firedog services and warranties, that's the only way to make profit in the PC segment. Consumer electronics profit margins have been declining over the past 10 years at a steep rate, you almost have to rely on warranties, services, overpriced accessories and good 'ole customer service which is where BBY needs to improve. All of that holds without even bringing in stiff competition from the likes of Walmart and Amazon which has very little overhead. They are doing good selling profitable mobile carrier plans but BBY has too much overhead an with today's savvy consumer, it will have a tough time as CC did.

posted on Dec 16, 2012, 10:03 PM 0

8. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

I am starting to wonder about the Amazon.com business model going forward. Until about a month ago, the compelling value proposition for Amazon.com was no sales tax. For high value, low weight items (DSLR cameras, MacBook Pro notebooks, etc.), Amazon was a viable alternative (as in you would have to want instant gratification over saving coin on a purchase). Now with the sales tax being added and having to pay shipping, Amazon has not been competitive to BBY. Reward zone further impacts the value proposition.

posted on Dec 16, 2012, 10:59 PM 0

1. Droid_X_Doug

Given the recovering economy, I suspect Best Buy will do better this season than last season. Better sales on Best Buy's part should enable a better offer to be made.