By MICHELLE CHAPMAN, AP Business Writer
NEW YORK (AP) — Best Buy Co. co-founder Richard Schulze said Thursday that he is committed to his offer for the electronics retailer and has heard from a number of private equity firms prepared to make "significant commitments."
Ten days after he made a public bid to take the business private, Schulze told Best Buy's board in a letter that he'd like to create a group and put forth a fully financed plan.
Schulze made an offer of $24 to $26 per share for Best Buy Co., which the Minneapolis company called "highly conditional." The offer values the company at as much as $8.84 billion. Schulze already owns 20.1 percent of the company's stock, so buying the rest of shares would mean coming up with about $6.9 billion.
Analysts have been skeptical that Schulze's bid would be high enough to get a deal done, and he might have trouble lining up investment firms to help pay for it.
But Schulze says private equity firms are interested and Credit Suisse "is highly confident it can arrange the necessary debt financing." Schulze says Credit Suisse has been contacted by "a number of major banks" that are interested in participating in the debt financing.
Best Buy said in a statement that Minnesota law does not prevent Schulze from further exploring and holding talks with private equity firms and that he does not need the consent of Best Buy's board to bring forward a proposal that names them.
Schulze said he's willing to roll over at least $1 billion of his own equity into the deal and would consider putting up potentially his entire existing stake, depending on terms the private equity firms want for the new ownership structure.
Schulze stressed to the board that time is of the essence.
"This is a critical time for Best Buy. The decisions that you make over the next few days and weeks may well determine the fate of this great company," he wrote.
Best Buy reiterated its stance, saying Thursday that its board will review and consider Schulze's letter in due course and remains committed to pursuing the best course for its shareholders.
Schulze says he has already put together a leadership team that would help to get Best Buy back on track, including former CEO Brad Anderson and former president and Chief Operating Officer Allen Lenzmeier.
Best Buy has struggled to remain relevant as a brick-and-mortar store as consumers increasingly shift to buying electronics online and more and more head to stores just to window shop and compare gadgets before making a purchase elsewhere.
The company is trying to avoid the fate of former rival Circuit City, which went out of business in 2009, partly because of changing shopper habits.
Over the past year Best Buy announced a major restructuring plan that includes closing 50 stores, cutting 400 corporate jobs and trimming $800 million in costs. It also fired CEO Brian Dunn amid allegations that he had an inappropriate relationship with a female employee. Schulze resigned as chairman in May, after Dunn's departure. A company investigation found that Schulze knew about the inappropriate relationship and failed to alert the board or human resources.
Schulze had been expected to stay on the board until the company's annual shareholder meeting in June, but he resigned unexpectedly before the meeting and said he was exploring options for his hefty stake in the company. Analysts had been expecting a possible bid since that announcement.
Best Buy shares rose 41 cents, or 2.1 percent, to $19.77 in morning trading.