Reuters is reporting that the Best Buy board of directors has asked founder and former chairman Richard Schulze to name the private equity (PE) firms that he can line up to help him buy out Best Buy stock and take the company private. But reportedly Schulze is playing coy, saying only that there’s a “number of leading private equity firms” prepared to make a significant commitment.
In an email to Reuters, the board said, in effect, it will take its time to study the proposal…
Schulze has taken his fight with the board public, demanding that they authorize him to assemble a buyout group (as required by Minnesota law) and demanding that they turn over pertinent…and confidential…financial data. Then board, in what may be an attempt to push back, demanded Schulze identify just exactly who these potential partners from the private equity community are.
“I still hope to work with the board on a mutually beneficial transaction — but you should know that I am not going away,” Schulze said in a letter to the board.
That’s for me to know and you to find out…
So far, Schulze has not named specific PE participants and in fact, may be struggling to nail down partners. According to Reuters, sources are telling the news agency that several private equity firms have been approached to join into a buyout group but that, so far, they are “sitting on the fence citing the lack of a tangible plan by Schulze and doubts about his ability to pull off the deal.”
One thing new that has come out of the recent back-and-forth and perhaps as a result of the reluctance of private equity to get involved – Schulze has let it be known that he may be willing to put even more than the $1 billion he originally offered from his personal net worth to make the deal happen.
A pretty big deal…
As we reported earlier, Schulze has approached the board about buying out the company and taking it private. The deal is a pretty big one and Reuters values it at a total of $10.9 billion – making it the largest buyout of the year. It would also be the largest buyout of a retailer ever.
Since Schulze’s offer came to light – many analysts and industry observers have expressed doubts about his ability to pull off the acquisition. A significant amount of the purchase would have to be debt, and banks are likely to be reluctant as Best Buy already holds $2 billion in debt. On top of that, credit reporting agencies are downgrading Best Buys bonds and at least two agencies have placed Best Buy on credit watch with negative implications…and that takes into account Schulze buying out the company.
Today, Schulze upped the ante again, saying that he would be willing to put his entire stake in Best Buy on the line, depending on the terms of his agreement with his private equity partners. Putting it all on the line, however, may still not be enough to get it done.