(Reuters) - U.S. electronics chain Best Buy Co Inc named Hubert Joly, the former head of travel company Carlson, as its new chief executive on Monday, hoping to tap the French restructuring expert’s acumen in turning around companies.
Still, shares of the world’s largest electronics retailer fell 5 percent in premarket trading, after takeover talks with founder Richard Schulze apparently broke down over the weekend.
Best Buy said late on Sunday that Schulze had rejected its offer to allow him the opportunity to do due diligence and pursue his interest in taking over the company.
“It is clear to us that there is quite a bit of acrimony between Mr. Schulze and the board of directors and that this distracting saga isn’t close to being finished,” RBC Capital Markets analyst Scot Ciccarelli said.
But Ciccarelli and other analysts applauded the appointment of Joly as permanent CEO, as it ends a period of uncertainty and puts someone at the helm with significant experience turning around technology companies.
“He is a little bit older, little bit more seasoned. He wasn’t on my radar screen. I doubt he was on anyone’s radar screen. I think this is a homerun for Best Buy,” said BB&T Capital Markets analyst Anthony Chukumba.
Joly, a former CEO of privately held hospitality and travel company Carlson, succeeds interim CEO Mike Mikan. Joly is expected to step into his role as president and CEO in early September when his visa is secured, Best Buy said.
Best Buy has become a showroom for Amazon.com and other online retailers, with people going to its stores to check out items like high-definition televisions, and then buying them elsewhere for less.
It has posted same-store sales declines in seven of the last eight quarters. It is expected to report results for the latest quarter on Tuesday.
Joly led the restructuring and growth of Vivendi’s video game business - now part of Activision Blizzard Inc - from 1999 to 2001. He also drove the turnaround of EDS - now part of Hewlett Packard Co - in France from 1996 to 1999, Best Buy said.
RBC’s Ciccarelli said that Joly’s experience turning around Vivendi’s business, which faced music and gaming pressures from a changing marketplace, “potentially provides him with the necessary tool set to begin a turnaround at Best Buy.”
Mikan was named interim CEO following the abrupt departure of CEO Brian Dunn in April during a personal conduct probe that eventually found he had engaged in an improper relationship with a female employee.
Schulze, 71-year-old former chairman of Best Buy, informed the board earlier this month that he was interested in teaming up with private equity partners to buy the company for $24 to $26 per share.
But Schulze had said there were obstacles to him making an official bid, including his inability to access the company’s financial data.
Best Buy said on Sunday that it had offered Schulze a proposal that would have provided the opportunity to do due diligence and take a buyout offer directly to shareholders.
It said “Schulze declined to participate.”
Best Buy shares fell to $19.26 in premarket trading from Friday’s close of $20.27.
(Reporting by Dhanya Skariachan; Additional reporting by Martinne Geller and Siddharth Cavale; Editing by John Wallace and Maureen Bavdek)
This story was refiled to remove extra letter from the analyst's name in the fourth paragraph