* Best Buy names Hubert Joly as new CEO - WSJ
* Company says board showed "great flexibility"
* Schulze "disappointed" and "surprised" by board
By Michael Erman
NEW YORK, Aug 20 Talks between struggling
retailer Best Buy Co Inc and its founder Richard Schulze
over taking the company private have broken down after the
company said Schulze had rejected its offer to conduct due
The consumer electronics company, which owns mobile phone
retailer Carphone Warehouse, said on Sunday that it had shown
"great flexibility", offering Schulze a proposal that would have
given him 60 days to put together a deal for the company and the
opportunity to take a buyout offer directly to shareholders from
"Mr Schulze did not accept the company proposal," it said in
A source familiar with the situation said that Schulze and
his team were "shocked" by the Best Buy statement because they
thought they were still in talks over an agreement on due
"I am disappointed and surprised by the Best Buy board's
abrupt termination of our discussions," Schulze said in a
statement released early on Monday.
Meanwhile, Best Buy has selected Hubert Joly, former head of
privately held hospitality and travel company Carlson, to
replace interim chief executive Mike Mikan, the Wall Street
Journal said on Monday.
Schulze, the 71-year-old former chairman of Best Buy, said
in a letter to the board this month that he was interested in
teaming up with private equity partners to buy the company for
$24 to $26 per share.
However, he noted obstacles to making an official bid, which
included a provision of Minnesota law that would prevent him
from bringing in private equity firms and his inability to
access the company's financial data.
Best Buy said that the board's offer would have given
Schulze a waiver of Minnesota law so that he could develop a
It said that it asked Schulze to agree to "certain
protections for Best Buy and its shareholders, with the goal of
limiting outside distractions", in exchange for opening its
books. It did not detail the conditions.
The retailer has previously called Schulze's proposal
"highly conditional" and asked him to name his still undisclosed
private equity partners.
Schulze, who owns about a fifth of Best Buy's shares, has
said that he plans to fund a deal through a combination of
investments from private equity firms, debt financing and the
reinvestment of about $1 billion of his own equity.
Last week Schulze sent the company's board a second letter
saying that he would be persistent in stalking Best Buy.
"I still hope to work with the board on a mutually
beneficial transaction - but you should know that I am not going
away," he wrote.
Schulze resigned from the company's board in June and said
he was exploring options for his ownership stake. He lost the
chairmanship after an investigation by a board committee found
that he had failed to tell the board about allegations of
personal misconduct by former CEO Brian Dunn.
Best Buy has been closing stores, cutting jobs and trying
out a new store format to improve business. It has faced
criticism for being too slow to react to a changing retail
environment in which many consumers use Best Buy as a "showroom"
to try out gadgets before buying them online or elsewhere for
Best Buy shares closed on Friday at $20.27.