Best Buy Founder Looks to Go Private with Help of Former Execs
July 31, 2012 5:42 PM
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Schulze has been mulling over several options including going private and selling his 20 percent stake in the company
Best Buy has been in hot water for awhile now due to its inability to compete with Internet retailers, and the company's founder is looking to take Best Buy private with the help of former executives.
Richard Schulze, founder of Best Buy, is currently looking to bring former Best Buy executives onboard to help him take the company private. He hasn't reached any agreements with anyone so far, but he is in talks with two people in particular: former Chief Executive Officer Brad Anderson and Senior Vice President of Enterprise Capabilities J.D. Wilson, whose position is being eliminated.
Schulze has been considering taking the company private after
stepping down as chairman of the board
back in June. Schulze resigned after an
discovered that he had withheld information about former CEO Brian Dunn's relationship with a female employee from the board.
Ever since, Schulze has been mulling over several options including going private and selling his 20 percent stake in the company.
However, analysts say going private won't be so easy. About $1-$2 billion would need to be raised from a private-equity firm and another $7-$8 billion in debt would need to be raised. It would be difficult to get investors to sell when a takeover would cost about $30 per share, giving it a value of $11 billion.
Best Buy has has problems ever since Internet retailers like Amazon hit the scene, offering cheaper prices for the same items and low shipping costs. Amazon, at the time, wasn't collecting taxes in very many states either (however, the company recently agreed to collect sales tax in more states in exchange for more distribution centers -- ultimately allowing same-day shipping rates for customers, which could potentially hurt Best Buy even more).
Best Buy was forced to
close 50 of its stores
back in March/April. With store closings came lay-offs of 400 corporate and support jobs at that time, and then
another 2,400 jobs were axed
earlier this month. Things aren't looking so hot for the brick-and-mortar retailer, and Schulze is looking to act fast.
The Wall Street Journal
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There's no reason to shop there anymore
7/31/2012 11:34:00 PM
I walked into a Best Buy for the first time in 3 years. During that time I have bought gear from Amazon, Newegg, eBay as well as bricks & mortar Staples and Walmart. I gave up on BB after the company complained about the thriftiness of customers, the "devil customer" spat of a few years back.
The place was weird, and more of a nostalgia trip than anything. It was mostly empty even on a Saturday afternoon. All the workers were walking around with clip boards, accosting people (for what purpose) so I did my best to avoid them. Things hadn't changed much at all. Prices were still higher than other places, selection was tiny - especially compared to online retailers. Knowledgeable staff? Forget it.
I left without buying anything and doubt I'll be back. Why? There's simply no reason to shop there.
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer
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