Best Buy names CEO; founder still eyeing company

Mon Aug 20, 2012 7:10pm EDT
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By Dhanya Skariachan and Martinne Geller and Nadia Damouni

(Reuters) - U.S. electronics chain Best Buy Co Inc named Hubert Joly, the former head of hospitality and travel company Carlson, as its new chief executive on Monday, hoping to tap his experience in turning around ailing businesses.

The naming of a permanent CEO ends months of uncertainty at the world's largest consumer electronics chain stemming from the abrupt departure of its prior CEO, Brian Dunn, in April.

But shares of Best Buy fell more than 10 percent amid concern about Joly's lack of experience as a retail CEO and questions about the abrupt breakdown of takeover talks with founder Richard Schulze over the weekend, leaving the future of his pursuit of the company in question.

"It is clear to us that there is quite a bit of acrimony between Mr. Schulze and the board of directors and that this distracting saga isn't close to being finished," RBC Capital Markets analyst Scot Ciccarelli said.

Best Buy said on Sunday Schulze had rejected its offer to allow him the chance to do due diligence and pursue a takeover. Schulze balked at the board's requirement that would have prevented him from publicly making a bid for the company for 18 months.

Over the course of the talks, Best Buy said it was willing to agree on looser terms, dropping the standstill agreement from 18 months to 12 months. The company then offered a standstill for 4 months but only with substantial conditions, including that if Schulze's offer was rejected by the Board, he would have to keep the offer fully financed throughout any proxy contest in 2013, a person familiar with the matter said.

Schulze had agreed to a year-end standstill without the conditions in a late afternoon call on Sunday, the person said. Schulze and his advisers waited for the company response, learning only from a company press release a few hours later that the Best Buy board had terminated negotiations.

Best Buy declined to comment on the weekend negotiations.   Continued...

Hubert Joly, President and Chief Executive Officer of Carlson, speaks during the 2010 Reuters Travel and Leisure Summit in New York in this file photo taken February 23, 2010. REUTERS/Lucas Jackson/Files