Exclusive: Best Buy founder presses forward on possible $11 billion buyout plan

Wed Oct 3, 2012 12:06am EDT
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By Greg Roumeliotis and Paritosh Bansal

NEW YORK (Reuters) - Best Buy Co Inc founder Richard Schulze and at least four private equity firms have started examining the books of the world's largest consumer electronics chain, early steps toward what could become a potential $11 billion buyout, according to people familiar with the matter.

Apollo Global Management LLC, Cerberus Capital Management LP, TPG Capital LP and Leonard Green & Partners LP are among firms that are conducting due diligence on Best Buy, as are Schulze and his financial advisers at Credit Suisse Group AG, several sources told Reuters.

At the same time, Schulze is negotiating individually with the private equity firms to iron out details such as how much of his roughly 20 percent stake in the company he would contribute in a bid, and what role he would play after a buyout, the sources said.

The idea is for Schulze then to bring the private equity firms together to form a consortium and submit a buyout proposal to Best Buy, according to the sources who declined to be identified because of the confidential nature of the discussions.

The process is still in the early stages and no decisions have been made yet, the sources said. One of the sources said the group is not likely to come together with any potential buyout proposal before mid-November.

But the start of due diligence and the negotiations between Schulze and the private equity firms show that Schulze's plan to put together a consortium to buy the company is moving ahead, although he must still leap many hurdles to succeed.

Schulze has said he could buy Best Buy for $24 to $26 a share, valuing it between $8.16 billion to $8.84 billion, or up to $10.9 billion including debt, which would make it the year's biggest leveraged buyout so far.

Best Buy shares closed at just under $17 on Tuesday, near four-year lows.   Continued...

People walk past a Best Buy store in New York August 21, 2012. REUTERS/Brendan McDermid