Best Buy founder pushing to take company private
The Best Buy logo hangs above a store on April 16, 2012 in Chicago, Ill.
Jeff Horwich: U.S. stock markets are all up this morning, but few stocks are jumping like Best Buy. Shares in the Minnesota electronics retailer got as high as 18 percent in early trading -- up about 9 percent at this hour.
Here's the reason: Co-founder Richard Schulze is making a bid to take the company private. Marketplace's Eve Troeh is here live in the studio with more on it. Hello, Eve!
Eve Troeh: Hey, good morning.
Horwich: So what does Schulze intend to do here?
Troeh: Well, he already owns about 20 percent of the company, and he wants to buy back the other 80 percent at a cost of almost $9 billion. So I talked to RJ Hottovy this morning. He follows Best Buy as a stock analyst at Morningstar. And, Schulze is offering to buy all that stock, Hottovy says, for up to $26 a share. That's more than the current market price but it might not be enough for current stockholders -- they might want to hold out for $30 a share.
Plus, says Minnesota law requires Schulze to get approval from the board of directors. That's not likely to be easy.
And, perhaps most importantly: Hottovy says Schulze hasn't revealed a real game plan.
RJ Hottovy: You know he said he had a vision to turn around this company, and while you certainly don't want to give everything away in this proposal, it's certainly lacking details on what the company needs to do.
Horwich: Here's an obvious question: Why would Schulze even want to wrestle back control of something that seems to most people to be a dying company?
Troeh: I think pride is the short answer. Schulze started this company, and so it makes sense that he either wants to right this ship, or go down with it. He did step down from the board in June, earlier than expected. That was amidst controversy over Best Buy's CEO, who apparently had an affair with a female employee. And Schulze has also faced criticism over many years for giving family members and friends these cushy jobs or board positions. So while the stock may be up on news that he's coming back in, sweeping in potentially, taking it over again, those longstanding concerns come back along with him.
Horwich: In terms of getting Best Buy back to health, what in the store needs to change?
Troeh: The big problem with any retail electronics is window shopping -- people come to the store to look, but then they whip out those smartphones and find it cheaper on Amazon or some other site and buy it there. Best Buy's been trying to combat this a little with Geek Squad staff, really focusing on customer service -- both in the store and online. Any announcements that Schulze makes beyond that, would definitely be news for this flagging industry.
Horwich: Marketplace reporter Eve Troeh, thanks for coming in.
Troeh: Thank you.