July 30 (Bloomberg) -- Best Buy Co. founder Richard Schulze is recruiting executives to help lead the retailer if his attempt to take the company private is successful, according to a senior Best Buy executive.
“He is talking to people he trusts,” J.D. Wilson, senior vice president of enterprise capabilities, said in an interview. “There is a small group he’d like to have with him in righting the ship. He is serious as a heart attack.” Wilson, who said his position is being eliminated as part of Best Buy’s cutbacks, was approached by Schulze in June and said he would work for the company if a deal went through.
Schulze also has been seeking to recruit other executives such as former Chief Executive Officer Brad Anderson, said a person familiar with the matter. Anderson has told other former Best Buy executives he is interested in joining Schulze’s effort, said the person, who declined to be identified because the matter is private.
Schulze, 71, has been exploring taking the world’s largest electronics retailer private after stepping down as chairman last month, a person familiar with the matter has said. An internal probe found he failed to tell the board about allegations that then-CEO Brian Dunn was having an inappropriate relationship with a female employee. Schulze said when he resigned that he would consider all options, including selling his 20 percent stake in the Richfield, Minnesota-based company.
Through a spokesman, Schulze declined to comment. Bruce Hight, a spokesman for Best Buy, declined to comment. Anderson didn’t return a phone message seeking comment.
Best Buy rose 1.7 percent to $18.06 at the close in New York after advancing as much as 5.9 percent. The shares have fallen 23 percent this year.
“Cooler heads are prevailing as they crunch the numbers and see that while Richard Schulze would like to take Best Buy private, the probability is very low,” Anthony Chukumba, an analyst at BB&T Capital Markets, said today by telephone from New York.
Schulze would need to raise $1 billion to $2 billion from a private-equity firm and $7 billion to $8 billion in debt, said Chukumba, who rates Best Buy shares hold.
“Lenders are wary in this macroeconomic environment,” Chukumba said.
A takeover of Best Buy would cost at least $30 a share, for a total value of about $11 billion including net debt, to persuade long-time investors to sell, according to Chukumba.
While Schulze has had discussions with several former executives interested in rejoining the company, he hasn’t reached an agreement with anyone, said a person familiar with the matter. He also has been speaking with potential investors and private-equity funds about raising money from them, said this person.
Best Buy has struggled as customers migrated to Amazon.com Inc. and other online merchants, posting a net loss of $1.23 billion on revenue of $50.7 billion for the fiscal year that ended in March, its first annual loss since 1991, data compiled by Bloomberg show. Same-store sales have declined in seven of the last eight quarters.
To contact the editor responsible for this story: Robin Ajello at email@example.com