Best Buy Co., the world’s largest electronics retailer, and founder Richard Schulze reached an agreement allowing him to conduct due diligence in his effort to acquire the company a week after earlier talks failed.
Schulze can bring a fully financed, definitive proposal to the company within 60 days, and if that offer is rejected, he must wait until January to pursue an acquisition through other means, the Richfield, Minn.-based company said Monday in a statement.
The agreement gives Schulze, 71, immediate access to financial data that may help him line up private-equity firms he needs to fund a takeover of the company he founded more than four decades ago and left in June. Talks between Schulze and Best Buy broke down on Aug. 19 and resumed two days later after the company posted quarterly earnings that trailed analysts’ estimates, a person familiar with the matter said last week.
“With access to company records, he can perform the due diligence that would be a condition of any potential private equity partner,” Michael Pachter, an analyst at Wedbush Securities in Los Angeles, said Monday in an e-mail. “He will have difficulty raising an additional $1 (billion) to $2 billion in equity from a partner, but without due diligence, his chances of raising that much in equity on blind faith were zero.”
Pachter rates Best Buy underperform, equivalent of a sell, and said Schulze has 20 percent to 30 percent odds of raising equity backing.
Best Buy rose 3.2 percent to $17.87 at the close in New York. The shares have declined 24 percent this year.
