Best Buy board had offered to show him the financials on the condition he wait on offer.
Best Buy Co. Inc. founder Richard Schulze rejected a proposal from the company's board of directors to allow him to review the company's financial data in exchange for delaying any takeover attempt until 2013, should the board reject his bid.
In a statement Sunday night, Best Buy said its board, which met last week to discuss Schulze's interest in buying the company, offered to provide Schulze with the necessary financial information so he can make a formal offer. However, if the board were to reject his offer, Schulze could not lobby shareholders for their support until next January.
"The primary purpose of the [board's] proposal was to assist the board in maximizing value for all Best Buy shareholders by creating an incentive for Mr. Schulze to offer his best proposal to the board of directors during these discussions and to minimize Mr. Schulze's ability to disrupt the company going forward," the statement said.
"Throughout discussions over the weekend, the Board showed great flexibility in the details around how an agreement with Mr. Schulze could be implemented, so as to not limit his ability to make [a] definitive proposal for the company that was in the best interest of all shareholders."
However, a source close to Schulze said the founder believes Best Buy needs to resolve the situation now, given the company's financial challenges, which include sluggish sales and declining stock price. Delaying the matter until next year will only create uncertainty at a time when Best Buy has already lost key talent and has ceded market share to competitors like Amazon and Wal-Mart, the source said.
"The company is just stalling for time," the source said. "But the company doesn't have another five months to waste."
Schulze says he knows how to turn Best Buy around and has formed a leadership team led by former CEO Brad Anderson. Schulze told the company's board that he has a group of private equity companies lined up to help bankroll his purchase.
The Star Tribune recently reported the private equity backers included KKR Co., Leonard Green Partners, TPG Capital and Apollo Global Management.
The source close to Schulze said Schulze just wants "natural justice" -- an immediate chance to present a buyout offer to shareholders should the board reject it.
Timing seems key in Schulze's battle with the board. Best Buy is approaching the holiday season, when it generates most sales and profit. It has also promised to release a long-term growth plan.
It also pledged to hire a CEO by year's end, a situation that seems to have been resolved.
The Wall Street Journal and New York Times reported Hubert Joly, who resigned abruptly as Carlson Companies' CEO, will join Best Buy as its CEO, beginning in September, after securing a visa.
Last week, Schulze reaffirmed his intentions, first disclosed Aug. 6, to buy Best Buy for as much as $8.8 billion. Schulze already holds a 21 percent stake in the company. Analysts estimate he would need to secure $3 billion to $4 billion from private equity investors and the rest from lenders to take Best Buy private.
The financial and legal hurdles have led some investors to question whether Schulze can pull a deal together. The board hasn't given him permission to form a buyout group, as required by Minnesota law, nor has it allowed Schulze to examine Best Buy's finances.
State law prevents a person who owns 20 percent or more of a company's shares from voting those shares in a transaction without board or shareholder approval.
A source close to the company said the board's proposal to Schulze was made in good faith.
"They have to look out for all shareholders, not just Mr. Schulze," the source said.
Asked if Best Buy was seeking more time to improve its standing among shareholders should Schulze's offer turn hostile, the source replied: "the board is just looking after the long-term interests of the company."
Schulze's transformation in recent months from company chairman to unsolicited bidder has played out in dramatic turns. The saga began with the departure of CEO Brian Dunn, who abruptly resigned in April amid allegations that he had had an affair with a female employee. Schulze lost his chairman title after acknowledging that he did not inform the board of those allegations. When Schulze resigned in early June, speculation began building that he was planning a takeover bid for the company he started.
Thomas Lee • 612-673-4113
Poll: Can the Wild rally to win its playoff series against Colorado?