Ten days after making a preliminary bid to purchase Best Buy Company, Inc., founder Richard Schulze on Thursday repeated an earlier request for the electronics retailer to hand over its financial information so that he and his investor group can present a “fully financed” offer.
 
On August 6, Schulze offered to purchase the Richfield-based company’s outstanding shares for $24 to $26 each, in cash—a range that equates to between $8.2 billion and $8.8 billion. But he said at the time that the offer price was “based on current public information and is subject to due diligence.” He also requested permission from the board to form a group to conduct due diligence and develop a more formal offer.
 
In a Thursday letter to Best Buy’s board, from which he resigned in June on the heels of a scandal involving ex-CEO Brian Dunn, Schulze reiterated the same request and accused the board of dismissing his “carefully considered proposal as a ‘highly conditional indication of interest.’”
 
“I am deeply concerned about the direction of the company and, as Best Buy’s largest shareholder, I cannot simply stand aside,” Schulze, who owns roughly 20.1 percent of the retailer’s shares, said in the letter. “I still hope to work with the board on a mutually beneficial transaction—but you should know that I am not going away.”
 
Following Schulze’s August 6 offer, Best Buy said that it “will review and consider the letter in due course, consistent with its fiduciary duties, in consultation with its financial advisors.”
 
Best Buy reiterated that statement in a Thursday e-mail to Twin Cities Business, adding that it would “pursue the best course for its shareholders.” The company also said: “Minnesota law does not prevent [Schulze] from further exploring and engaging in discussions with his private equity partners, and he does not need the consent of Best Buy’s board of directors to bring forward a proposal that names them.”
 
Schulze’s proposed transaction would be financed through a combination of private equity investment, his own equity investment, and debt financing. He added that “a number of leading private equity firms” are prepared to make “significant commitments, subject to due diligence,” and “I am prepared to roll over into this transaction at least $1 billion of my own equity—and potentially all of my existing stake. . .”
 
Schulze called his proposal a “win-win” for all involved, saying that it would “deliver compelling value for shareholders through a significant cash premium, provide new opportunities for customers, and create a future for Best Buy employees.”
 
In the letter, Schulze also said that he has developed a plan focused on “renewed growth and increased efficiency to address Best Buy’s challenges” and that he has tapped former Best Buy CEO Brad Anderson and former President and Chief Operating Officer Al Lenzmeier to serve on his leadership team. The private equity firms he’s been working with believe that he has identified “the right plan and the right leadership,” he added.
 
Although Schulze has hasn’t revealed which private equity firms he’s been working with, the Star Tribune recently reported that he had recruited four firms to help bankroll his proposed buyout: KKR & Company, Leonard Green & Partners, TPG Capital, and Apollo Global Management.
 
Best Buy, meanwhile, has recently taken steps to retain its current leaders and has announced major restructuring efforts as it attempts to turn the public company around. After a mass exodus of key executives, the company announced a plan to pay $2 million in cash, as well as stock awards valued at roughly $8 million, to four executives in a retention effort. The company has also announced mass layoffs and store closures as part of its turnaround strategy. (Click here to read more about the strategies recently outlined by interim CEO G. Mike Mikan at Best Buy’s annual meeting.)
 
Schulze spent 46 years at Best Buy and its predecessor company, Sound of Music, after founding the company in 1966. He served as CEO and chairman until 2002, and as chairman and a board director until June.
 
Shares of Best Buy’s stock were trading up nearly 4.2 percent at $20.17 mid-afternoon Thursday following news of Schulze’s letter to the company’s board. To read a press release that Schulze issued Thursday, which contains the letter, click here.
 
Best Buy is Minnesota’s third-largest public company based on revenue. It has recently shuttered stores and laid off workers as it attempts to reinvent itself and to compete with online retailers like Amazon.com. In May, the company announced that its first-quarter earnings fell 25 percent, due in part to restructuring costs and a decline in same-store sales.