Four Private Equity Firms Back Schulze’s Buyout Bid
When Best Buy founder and former Chairman Richard Schulze announced Monday that he has extended an offer to buy the company, he said he plans to finance the proposed deal through a combination of investments from private equity firms, about $1 billion of his own money, and debt financing.
Those private equity firms were left unnamed, but the Star Tribune reported Wednesday that Schulze has recruited four firms—KKR & Company, Leonard Green & Partners, TPG Capital, and Apollo Global Management—to help bankroll his proposed $8.8 billion buyout.
The Minneapolis newspaper, citing unnamed sources “close to Schulze,” reported that the firms would collectively provide $3 billion to $4 billion to back Schulze’s bid.
Sources also told the Star Tribune that Schulze may tap a strategic investor who might want Best Buy to sell certain products or services.
But Schulze has yet to win over Best Buy’s board, which hasn’t advanced the proposal. Some analysts told the Star Tribune that Schulze will need to come up with more money—close to $10.2 billion—to compensate for restructuring risks and make an appealing offer.
Best Buy has announced mass layoffs, plans to shutter 50 big-box stores, and other restructuring efforts as it attempts to turn itself around. The company will soon announce plans to eliminate more than 1 million square feet of retail space, an unnamed source told the Star Tribune. Most of the reduction will be acheived by shrinking stores, but Best Buy will also close more locations, the Minneapolis newspaper reported.
Read the full Star Tribune story here.