| NEW YORK
NEW YORK Aug 24 Best Buy founder
Richard Schulze has reached out to some of the retailer's top
shareholders and Wall Street analysts, hoping they will press
the company to allow his up to $8.8 billion buyout proposal to
move forward, sources familiar with the matter said.
Schulze's advisers at investment bank Credit Suisse and law
firm Shearman & Sterling LLP have reached out to investors
including Putnam Investment Management LLC and Fidelity
Management & Research Co, the sources said. Putnam and Fidelity
account for 11 percent of Best Buy.
Schulze's team has also reached out to at least half a dozen
analysts who publish research about Minnesota-based Best Buy,
the sources said.
The tactic comes as Schulze's team resumed negotiations with
the world's largest consumer electronics chain, after talks
broke down last weekend, other sources familiar with the
The company, Schulze's advisers and a representative for the
former Best Buy chairman declined comment, as did the two
Schulze, who owns 20.1 percent of Best Buy, needs the
board's approval before he can make a formal bid. A Minnesota
anti-takeover law prevents shareholders from launching a bid for
a company for four years if they accumulate a stake without
prior board approval. That means Schulze cannot form a buyout
group with private equity firms or firm up financing for a
potential bid until the board gives a go-ahead.
Moreover, sources have said private equity firms want to be
able to do due diligence on the company - which is struggling
against competition from rivals such as Amazon.com Inc
and Wal-Mart Stores Inc - before they commit to a buyout
bid along with Schulze.
At this stage, Schulze's team is pitching analysts and
shareholders to put pressure on the company to at least open its
books to them, so that they can put together a firm bid for the
But some of the analysts who met with Schulze's advisers
were still hoping for more details of his plan. One analyst who
spoke with Schulze's advisers said he was not given "any
granularity on how they plan to get the deal done."
These analysts said they believed it was hard for anyone to
buy Best Buy. The company hired a new CEO on Monday and the
board may want to first give him time to craft a turnaround
Best Buy investors "are skeptical about a deal getting
done," said Wedbush analyst Michael Pachter, who decided against
taking a meeting with Schulze's advisers.
But dismal quarterly results from Best Buy earlier this week
could also add credence to Schulze's argument that value is
eroding by the day.
Two analysts said Schulze's original proposal of $24 to $26
a share for Best Buy could be more palatable now to investors.
Best Buy's shares closed down 3.9 percent at $17.31 on