Dunn Lambert, LLC
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Dunn Lambert, LLC
comprehensive legal services for businesses call 201-957-0874

Best Buy co-founder still trying to acquire struggling company

New Jersey consumers can likely remember when big-box store Best Buy was still a giant in the electronics market. After all, it wasn't that long ago when buying a new TV or computer meant visiting one of the giant warehouse stores and getting help or recommendations from a store employee. But times have quickly changed, and as more consumers rely on discount stores like Walmart or online retailers like Amazon, Best Buy has been forced to close many of its locations and continues to flounder.

All is not lost, though -- at least that's the view of Best Buy co-founder Richard Schulze. He's in talks to acquire the company, though business analysts and investors appear to be skeptical. The talks began after Best Buy announced its quarterly earnings earlier this week. Despite the fact that the company lost 13 percent of its value, the company is negotiating an agreement with Schulze that would allow him to conduct due diligence to buy the company for around $9.5 billion.

Schulze left the company in June after the board of directors accused him of failing to relay allegations of an inappropriate relationship between the former CEO and a female employee. In July he offered to buy the company for $24 to $26 per share and contribute $1 billion in equity from his stake in the company. The initial negotiations for an acquisition broke down, but Schulze has been adamant in pushing his proposal.

The current agreement regarding Schulze's potential acquisition contains certain restrictions set by the company, including limits on his ability to contact the board of directors and management, according to people familiar with the negotiations. Schulze also may not be able to replace directors if the company rejects his acquisition proposal.

Amid these talks, Best Buy has named a new chief executive officer to oversee the company's new turnaround plan, which involves establishing smaller locations than its traditional warehouse stores. As a result of its leadership change, the company is holding off on forecasting profits for the second half of the fiscal year. Sales in its second quarter fell 2.8 percent to $10.5 billion. Some analysts have said that if the new CEO fails in the turnaround plan, stockholders may instead sell their shares to Schulze, whether or not Best Buy's board of directors approves.

Source: NJ.com, "Best Buy reportedly in talks again with co-founder Schulze," Aug. 23, 2012

· Our firm handles mergers, acquisitions and a wide variety of other business transactions. To learn more about our practice, go to our New Jersey transactional law page.

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