Casting himself and his management team as the only ones who can rescue Best Buy Co., founder Richard Schulze said Monday that he wants to buy the struggling Minnesota retailer, and he's ready to pay as much as $8.8 billion.

Schulze, who abruptly resigned from Best Buy's board of directors in June, announced his ambitions publicly for the first time, asserting that he and a group of investors are prepared to pay $24 to $26 a share for the Richfield-based company.

In a letter to the board of directors, Schulze said that now is "the moment of truth for Best Buy" and that substantial changes are needed if the company is going to make a comeback. Best Buy generates about $51 billion in annual sales and employs 167,000 employees worldwide, including 7,500 in Minnesota, but has been beset by stagnant sales.

"I cannot emphasize strongly enough how much I believe in Best Buy and how much I would welcome the opportunity to do what's best for shareholders and Best Buy," Schulze wrote. Taking the publicly traded company private, he added, "would allow shareholders to receive compelling value for their shares and it would allow Best Buy to take the actions that it needs to take outside the public sphere."

Best Buy's stock price has fallen more than 50 percent in the past two years as competition from Amazon and Wal-Mart has risen. Schulze's new management team includes former CEO Brad Anderson and former chief operating officer Al Lenzmeier, who along with Schulze led Best Buy as it grew to become the nation's top consumer electronics retailer.

Schulze did not name his investment partners, but the group includes at least five major investors with the possibility of adding another down the road, according to two sources with direct knowledge of Schulze's plans. His proposed offer for the company represents a 20 to 30 percent premium over Monday's closing price of $19.99 a share.

Despite Schulze's readiness to lead Best Buy once again, he faces considerable obstacles to buy it. The company's board hasn't given Schulze permission to form a buyout group as required by Minnesota law, nor has the company allowed Schulze and his team to examine Best Buy's finances.

Questions about financing

In a statement, Best Buy said it learned of the $24 to $26 per share proposal only from Schulze's letter. "The board of directors will review and consider the letter in due course, consistent with its fiduciary duties," the company said.

A source close to Best Buy who was not authorized to speak for attribution sought to rebut any perception that Best Buy was ignoring the Schulze proposal. The source said Best Buy, whose financial advisers include Goldman Sachs and JPMorgan, have held discussions with Schulze's representatives. Now that Schulze has gone public with his plans, it's unclear whether the two parties will resume talks.

The main stumbling block is that Best Buy does not believe Schulze has the financial firepower to make a credible offer, calling Schulze's proposals only a "highly conditional indication of interest." That's why Best Buy has yet to open its books to Schulze's team.

When asked if Schulze identified his investors to the board, the source close to the company said "they only know what's in [Schulze's] letter."

Two sources who are close to Schulze reject the suggestion that he can't complete the deal. "The money is in place and they know it," said one.

The $8 billion or more needed to complete the deal includes $1 billion from the 21 percent stake Schulze has in the company, $3 billion to $4 billion in debt financing, and $3 billion to $4 billion from private equity firms, sources say.

The sources close to Schulze said he wouldn't have disclosed his intentions unless he had secured financing. The sources requested anonymity, citing the delicate talks between Schulze and Best Buy.

By going public with his plans, Schulze is applying pressure to the Best Buy board by rallying shareholder and public support. If that doesn't lead to a deal, Schulze could work with other shareholders to acquire a majority share of the company without a formal buyout group, although sources close to Schulze concede that such a process would be messy.

Analysts and major institutional investors who own Best Buy stock say the company can't block Schulze forever, suggesting that large shareholders would accept the $24 to $26 a share offer. David Strasser, an analyst with Janney Capital Management, said Schulze could eventually raise his offer closer to $30 a share.

Several investors, big and small, say they generally believe that Best Buy is worth more than $30 a share. But when, or even whether, Best Buy's stock price crosses that threshold remains a question.

Schulze, who founded the company with a single St. Paul music store in 1966, faces obstacles that extend beyond its struggle to boost sales. The company has seen an exodus of top management and has been distracted by internal strife.

CEO Brian Dunn abruptly resigned amid allegations that he had an affair with a female staffer. Schulze lost his chairman title and later resigned after acknowledging that he failed to inform the board about Dunn's behavior. Meanwhile, Best Buy has lost several key executives since the turmoil began, including chief technology officer and Geek Squad founder Robert Stephens and international CFO Dave Deno.

Growth plan in works

The company said it would take about nine months to choose a new CEO. Interim CEO G. "Mike" Mikan, who is a leading candidate for the job, has said the company will release a long-term growth plan by the end of the summer.

Some analysts suspect that Best Buy is stalling until Mikan gets a chance to present his growth plan to shareholders and the investment community. Experts, though, say Minnesota's laws could complicate Schulze's efforts.

Frank Harvey, an attorney at Larkin Hoffman in Minneapolis, said state law prevents a person who owns 20 percent or more of a company's shares from voting on those shares in a transaction without board or shareholder approval. The laws were amended in 1987 to protect boards from hostile takeovers after Dart Group Corp. tried to take over Dayton Hudson Corp., parent of Target Corp. at the time.

Marshall Tanick, a Minneapolis business attorney, said the law has some formidable notice and disclosure requirements that Schulze's group would have to get past. "I would imagine that he and his group face significant hurdles in overcoming the obstacles brought by the anti-takeover law," Tanick said. Schulze's "letter's not threatening. But it's the first step in what could be a significantly contentious matter," Tanick said.

Asked whether Schulze would sell his stake should he fail to buy Best Buy, a source close to him replied:

"Dick doesn't operate with a lose scenario. Best Buy runs in his blood."

Staff writer Walker Moskop contributed to this report. Thomas Lee • 612-673-4113