Best Buy founder works with Credit Suisse on options: sources

Tue Jun 26, 2012 7:05pm EDT
 
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By Nadia Damouni and Dhanya Skariachan

NEW YORK (Reuters) - Best Buy Co Inc (BBY.N: Quote) founder Richard Schulze is working with banks including Credit Suisse CSGN.VX to explore a potential private takeover of the world's largest consumer electronics retailer, three sources close to the matter said on Tuesday.

Schulze and the banks were still in the early stages of determining what steps to take, the sources said.

But the board of directors of the company he founded in 1966 has made it more difficult for Schulze to force a shareholder vote on any buyout proposal without the board's consent, after raising the ownership threshold for calling a special meeting to 25 percent from 10 percent, according to a filing with the Securities and Exchange Commission last week.

Schulze is Best Buy's largest shareholder, but his 20.1 percent stake falls short of the new level.

One source said Schulze may choose to wait until the company lays out a turnaround strategy in September. The strategy could include naming a permanent CEO and a plan to fend off online rivals such as Amazon.com Inc (AMZN.O: Quote).

However, Schulze could act sooner if he lines up the necessary deal financing, another source said.

The company, a bellwether for the consumer electronics industry, has posted declines in same-store sales in seven of the last eight quarters. It has also been criticized for being too slow to react to a changing retail world, where some shoppers use Best Buy as a "showroom" to try out electronics and then buy the same items at lower prices online.

Schulze resigned from the company's board earlier this month and said he was exploring options for his ownership stake. He lost his chairman title after a probe by a board committee found that he had failed to tell the board about allegations that former CEO Brian Dunn had engaged in an improper relationship with a female employee.   Continued...