Minneapolis — Best Buy has reached an agreement with Dick Schulze that clears the way for the founder and former chairman to pursue his plans to acquire the company.
The deal, which follows a week of private negotiations and public bickering, allows Schulze and his backers to begin delving into Best Buy’s books and to form a private equity investment group with the goal of buying out the troubled chain.
Best Buy also said it will allow Schulze to make a fully financed definitive proposal within 60 days, as previously offered.
However, if Best Buy’s board rejects the buyout offer, Schulze will have to wait until January before presenting a second proposal. The board would then have 30 days to review the second offer before Schulze could take it directly to shareholders at the annual meeting in June or at a specially convened gathering.
In turn, Schulze agreed to wait one year before resuming his takeover attempt if he is unable to get his offers approved by the board or the shareholders. Best Buy could then continue pursuing its own turnaround plans under newly named CEO Hubert Joly.
As part of the agreement, the board has waived a recent adoption of Minnesota law — essentially a poison pill — that would have prevented Schulze from working with his private equity partners to develop and present an acquisition plan.
Schulze will also be offered two seats on the board, reflecting his 20-plus percent ownership position, which would be revoked if he takes his proposal directly to shareholders or materially violates the standstill provisions of the new agreement.
Best Buy initially proposed an 18-month standstill period that Schulze publicly rejected last week as “completely unacceptable in light of the fact that urgent change is needed at Best Buy and value is eroding further every day that change is not effected.”
Speaking for Schulze, Best Buy said its founder is pleased that “an agreement has now been reached that will allow him to conduct the due diligence he had sought.”
The board added that the agreement “establishes a non-exclusive, orderly process which satisfies the requests made by Schulze, while at the same time protecting the interests of all shareholders.”
