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Best Buy Names CEO; Schulze Declines Board’s Proposal

Minneapolis — Best Buy has named Hubert Joly, an executive who helped restructure Vivendi’s video game business and was responsible for other corporate turnarounds, as its president/CEO.

In addition, yesterday Best Buy founder and former chairman Dick Schulze, who is attempting to again take control of the chain, reportedly rejected a due diligence plan proposed by Best Buy’s board.

On Joly’s appointment, Best Buy’s chairman Hatim Tyabji said, “I am confident [Joly] will be a great fit for Best Buy. Hubert’s range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.”

Joly is expected to take the reins at Best Buy in early September when his visa is secured. Joly will succeed G. Mike Mikan, a member of the board who has served as interim CEO since April. Mikan will continue to be the interim CEO until Joly’s start date. Following that, Mikan will continue to serve on the board, where he will take the position of chairman of the audit committee, the chain said.

Over the last 15 years, Joly led the restructuring and growth of Vivendi’s video game business (now part of Activision Blizzard) from 1999 to 2001, which included the development of a massive online presence with Diablo II and then World of Warcraft. He later oversaw the integration of Universal and Vivendi’s media assets in the U.S., and was part of the team that led the restructuring of Vivendi in 2002 to 2004.

In the technology sector, he drove the turnaround of EDS (now part of Hewlett Packard) in France from 1996 to 1999, boosting revenues from a then rapidly declining 1.3 billion French francs to 2.1 billion, while increasing the profit margin by 20 points of revenue. He was also, for a brief period of time Vivendi Universal’s, CIO.

In the service sector, he has led the transformation of Carlson Wagonlit Travel (CWT) into the global leader in corporate travel management, increasing sales from $8 billion in 2003 to $ 25 billion in 2007, growing online bookings to more than 50 percent.

In 2008, he became the CEO of CWT’s parent, Carlson, the worldwide hospitality and travel company headquartered in Minneapolis, whose brands employ more than 170,000 people in 150 countries.

The news came before Best Buy’s fiscal second-quarter report and conference call tomorrow.

Separately, Best Buy’s board released a statement yesterday about offering founder Dick Schulze the opportunity to conduct due diligence and pursue his expressed interest in acquiring outstanding shares in the company, but the statement said Schulze declined to participate.

On Friday, Aug. 17, the board convened to evaluate Schulze’s indication of interest in the company. The board authorized its advisers to initiate discussions with Schulze on a cooperation agreement that would establish an orderly process under which he would both gain access to certain financial, operational and legal information and be able to move forward with discussions with private equity partners and debt financing sources, as he had requested.

Included in the proposal was a routine and customary request that Mr. Schulze agree to certain protections for Best Buy and its shareholders, with the goal of limiting outside distractions, in return for access to non-public information and the ability to form an investor group.

The board proposal would have provided a waiver of Minnesota law, in order to provide Schulze the ability to work with his private equity partners to develop a definitive proposal for the outstanding shares of the company.

In addition the board said it provided:

  • due diligence access for Schulze to the company’s non-public information;
  • due diligence access for Schulze’s private equity partners;
  • due diligence access for Schulze’s advisers and debt-financing sources; and
  • an opportunity to bring forward a fully financed proposal within 60 days.

The board proposed that Schulze, beginning in January, be allowed to take his buyout offer to shareholders, should the board decide to reject any definitive proposal to acquire shares. Schulze did not accept the company proposal.