Print 21 comment(s) - last by jardows.. on Aug 29 at 12:18 PM

  (Source: EfficientGuide)
Schulze has 60 to offer a purchase proposal

Retail electronics giant Best Buy has been going through some rough times as the company faces increasing pressure from online and discount retailers such as Amazon and Walmart. Best Buy founder Richard Schulze announced about a month ago that he was considering an attempt to take Best Buy private with private equity or possibly selling his 20% stake in the company. 
The Best Buy board and Schulze have announced that they have reached an agreement that will permit Schulze to form an investment group and conduct due diligence needed to make a fully financed proposal to acquire Best Buy. The agreement establishes a non-exclusive, orderly process with Schulze and has been filed with the SEC.
The agreement allows Schulze to perform immediate due diligence with access to non-public company information to be shared with advisors and potential private-equity partners. Under the terms of the agreement, Schulze will be allowed to bring forward a fully financed and definitive proposal within 60 days of the beginning of the due diligence period. The due diligence period can also be extended in certain circumstances.
Schulze has also agreed that if his proposal is rejected by the Board of Directors, he will not pursue an acquisition until January 2013. At that time, Schulze will have the opportunity to make a second offer if the original is rejected. The Wall Street Journal reports that Schulze has previously publicly announced that he was proposing a $10 billion buyout of the company he helped found and that his financial partners were "highly confident" that the money to purchase the company could be raised.
Best Buy has also announced that it will offer Schulze two seats on the company's board reflecting the 20% of the company he owns. However, the two seats could be withdrawn if Schulze decides to make a purchase offer directly to shareholders or violates standstill provisions of the agreement.

Sources: Reuters, Wall Street Journal

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By p05esto on 8/28/2012 10:53:18 AM , Rating: 2
I would rather buy stuff in person if it was about the same price. I like to see TVs before purchasing, look at the laptop, hold the camera, etc. I really wish BB would be competitive on prices (has to include tax). If I have to pay $200 more for a TV at BB then it's just not worth it... maybe for $25 more on a $120 TV is ok, but that's about it.

RE: Store
By Motoman on 8/28/2012 11:23:47 AM , Rating: 2
They can't.

The fundamental problem is that B&B and online have vastly different cost structures.

B&M has to rent massive amounts of retail space. They have to manage logistics and inventory around to all their stores. The have to have several different kinds of staff at each store. So on and so forth.

Online vendors have to do none of that. Their overhead is vastly smaller than B&M. Hence, they can sell a given product at a much lower price and still make the same, if not better, margin.

This is why B&Ms will never be able to match prices with online. Not for other than the occasional door-buster or loss-leader that is. And as implied there, the B&M is actually losing money on those items.

B&Ms only have one possible advantage over online: instant gratification. Everything else is necessarily in the online vendor's favor. B&M has to learn to exploit their one advantage, or die.

RE: Store
By TheDoc9 on 8/28/2012 2:34:09 PM , Rating: 2
While I agree, the problem with this logic is that there's a lot of successful B&M stores that are in no danger of closing their doors. Fry's comes to mind. This is really about mis-management and greed on the part of Best Buy.

RE: Store
By wempa on 8/28/2012 2:52:45 PM , Rating: 2
Even if they cannot match the online price, they should at least try to set prices that makes it worth the "instant gratification". If a TV costs you $1500 in the store and $1250 online, you most likely aren't going to be paying that $250 premium. If, however, it was priced only $50-$75 more in the B&M store, you'd be a lot more likely to eat that cost. Sales would increase dramatically, too. So, it'd be a better situation than the one they are in now.

RE: Store
By Solandri on 8/28/2012 4:42:11 PM , Rating: 2
They don't have to match all online prices. They just have to match or beat some. Then while you're in the store to buy that sale item, you notice the router and LAN cable you also needed for only $3 more than online. And since it's right there in front of you and you've already paid for the gas to get there, you pick those up too.

The problem for Best Buy is that they charge like $20 for a $3 cable. Frys doesn't do that as much. Most of the stuff I see there is priced pretty close to online prices, and their sale prices frequently beat online prices. So they remain in business.

RE: Store
By MrCaffeineX on 8/29/2012 9:56:37 AM , Rating: 2
This strategy is as far as I can tell very successful for MicroCenter. They sell you a CPU/Motherboard at a loss, but make up for it on other items such as Memory, Cases, PSUs, HDDs, etc. If you go into MicroCenter, at least the two I have been in, they actively advertise the Newegg and TigerDirect prices for CPUs as well as Motherboards, but not for the products where MicroCenter's price is higher. I imagine they must get a decent price on CPUs and Motherboards, since they seem to stock a limited variety of each, but in extreme quantities, at the stores I have shopped in. I also enjoy the fact that their salespeople, while not necessarily the brightest, are not trying to push cell phone upgrades or satellite TV service on me when I shop there.

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov

Most Popular ArticlesAre you ready for this ? HyperDrive Aircraft
September 24, 2016, 9:29 AM
Leaked – Samsung S8 is a Dream and a Dream 2
September 25, 2016, 8:00 AM
Yahoo Hacked - Change Your Passwords and Security Info ASAP!
September 23, 2016, 5:45 AM
A is for Apples
September 23, 2016, 5:32 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki