Best Buy Founder Leaves Board, Rumored to Be Contemplating Buyout
Founder and Chairman of Best Buy (NYSE: BBY) Richard Schulze, 71, resigned from the board today and said that he may sell his recently disclosed 20.1% stake in the retailer. Shares fell in early trading but have since rebounded on rumors that the former Chairman is exploring taking the company private.
"I continue to believe in Best Buy and its future--and care deeply about its customers, employees and shareholders. There is an urgent need for Best Buy to reinvigorate growth by reconnecting with today's customers and building pathways to the next generation of consumers."
Mr. Schulze initially announced that he would step down at the company's annual meeting on June 21, after an investigation found that he knew of an inappropriate relationship between former CEO Brian Dunn and a female staffer.
Michael Pachter, Managing Director at Wedbush Securities, said that the buyout may be a good idea. "At this price, it is a sound idea. If he believes in the model, he should go for it." Best Buy currently has a market cap of $6.74 billion, so it would be one of the biggest buyouts in recent times. Fidelity Management and Research is the second largest shareholder, owning 6.9% of the shares outstanding.
Best Buy has been struggling to perform due to increased competition from online retailers such as Amazon (NASDAQ: AMZN). In order to combat "showrooming," where customers only come to Best Buy stores to view the product and then leave and order it online, Best Buy has been shrinking store size and is focusing on more profitable products, such as cell phones.
Shares of Best Buy closed down $.19 cents, after being down as much as $.88 this morning. The stock is down about 40% from its 52-week high of #2.85.
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