Best Buy co-founder Richard Schulze said yesterday that he wants to take the struggling electronics chain private for as much as $8.8 billion despite skepticism about whether he can line up financing for the deal.
The proposed buyout, which would be the biggest ever for a US retail chain, comes just months after Schulze resigned from the board following a scandal involving former CEO Brian Dunn, who was sent packing after an alleged affair with a female employee.
Shares of Best Buy yesterday surged $2.35, or 13.3 percent, to $19.99 — well short of Schulze’s offer, which is equal to $24 to $26 a share.
“There is no question that now is the moment of truth for Best Buy and that immediate and substantial changes are needed for the company to return to its market-leading ways,” said Schulze, who went public with his offer after Best Buy’s board recently delayed talks.
“I am deeply concerned that further delay and indecision will cause additional loss of both value and talented leaders who are now uncertain of the company’s future,” he added.
Schulze said he has devised a turnaround plan for the struggling retailer, whose business has plummeted as shoppers increasingly use its big stores as “showrooms” to check out TVs, digital cameras and other gadgets before buying them at cheaper prices online.
In a statement, Schulze said his adviser, Credit Suisse, is “highly confident it can arrange the necessary debt financing” to get the deal done.
But insiders said finding partners who will shell out cash will be trickier. Schulze, the largest shareholder with a 20 percent stake in the company, has pledged his $1 billion in shares toward the deal.
But the retail entrepreneur would still have to raise another $2 billion in cash to complete a deal, and private-equity firms don’t appear to be especially interested, according to banking sources.
Best Buy confirmed it had received Schulze’s offer and said it would discuss it with advisers, including JPMorgan and Goldman Sachs.