Best Buy founder Richard Schulze failed Thursday to make a bid to acquire the company, and negotiations for Schulze to return to the board of directors also collapsed.

Schulze was facing a deadline Thursday to make a formal offer to buy the company. Instead he spent most of the day trying to negotiate ways to expand his partial control of the board with the help of one his investors, according to sources close to the situation.

While Schulze didn’t make a bid for Best Buy, at least two of the private equity groups that had been expected to partner with Schulze offered to pay $400 million to $700 million to buy a minority stake in the company, one source said.

The Best Buy directors rejected those offers because they were unhappy with the terms, the source said, declining to provide details.

In a conference call with analysts Friday morning, CEO Hubert Joly said the offers would have been "dilutive" to existing shareholders.

It was unclear why Schulze was not involved with those bids. He had been working to purchase the company for months, and the private equity groups were seen as key partners to his plan.

The last-minute talks and bids culminated what had been months of behind-closed-door moves to decide the leadership of Best Buy in the critical months ahead.

Thursday’s end to Schulze’s maneuverings doesn’t necessarily mean he has given up playing a larger role, said a source close to Schulze. He could still seek to buy the company next year or try again to regain control of the board.

“The journey is still starting,” the source said.

Schulze has been engaged in the high-stakes effort to acquire Best Buy since shortly after he was forced to resign from the board last spring. He said the future of the world’s largest consumer electronics retailer was at stake, as the company has been beset by stagnant sales and a plummeting stock price.

Schulze founded the company in 1966 with a single music store in St. Paul. Today, Best Buy has 160,000 employees, including 8,000 in Minnesota.

After Schulze left the company last year, he announced that he was lining up investors to make a bid that would have been worth more than $8 billion. During talks that were tense at times, Schulze and Best Buy twice agreed to extend the deadline for an offer.

Though the board would welcome back the founder, directors are opposed to Schulze’s return as chairman, said the source close to Schulze. Best Buy declined to comment Thursday, noting that the company will address the matter Friday morning during a conference call with investors.

Rejoining the board would fall far short of Schulze’s ultimate goal of acquiring the company, an effort he launched with the help of former CEO Brad Anderson and former president Al Lenzmeier. Best Buy’s board had forced Schulze to resign as chairman after it determined the founder withheld information about allegations that then-CEO Brian Dunn had an affair with a female employee.

Since then, Schulze has aggressively attempted to assemble a buyout package, courting major investment groups Texas Pacific Capital, Leonard Greene & Partners and Cerberus Capital Management to help finance the bid. The bids for Best Buy that were rejected by its board are believed to have come from among those groups.

At one point, Schulze waged a public battle with the board, which initially refused his request to see Best Buy’s confidential financial information.

Since joining the company in September, CEO Hubert Joly has worked hard to improve Best Buy’s relationship with Schulze. Joly arranged for Schulze’s buyout team to speak to executives throughout the company. He also kept Schulze updated about key hires, including Sharon McCollam as chief financial officer and Shawn Score as U.S. retail chief.

“Joly has been remarkably generous to Schulze,” said Carol Spieckerman, president of retail consulting firm newmarketbuilders. “He has kept Schulze in the loop. Best Buy is not shooing him away.”

However, Wall Street analysts have doubted whether Schulze ever had the financing in place. They questioned why investors would be so eager to pay billions for a struggling retailer facing intense competition from the likes of Amazon and Wal-Mart.

The Star Tribune previously reported that Schulze was set to submit a bid in mid-December but that he agreed to a last-minute request by Best Buy to extend the deadline to late February, so he could fully consider the company’s holiday performance.

The move seemed to pay off. Best Buy reported stronger-than-expected sales in December, and analysts expect a good January. Over the past two months, Best Buy’s stock has soared more than 40 percent, making a buyout more costly for Schulze and his partners.

The source close to Schulze has consistently insisted that Schulze could have made a credible offer, though some analysts remain skeptical.

If Schulze did not a submit a bid, “I can’t imagine he had the money to buy Best Buy,” Spieckerman said.

Instead, Schulze looked for another way to reclaim control without having to borrow billions of dollars for a buyout, holding extensive discussions with directors about returning to the board, the source close to Schulze said. However, directors opposed Schulze’s desire to lead the board. “They want him back,” the source said. “They don’t want him back as chairman.”

As a result, the prospect of board turmoil could linger for Best Buy, just as the company is regaining strength under Joly’s leadership.

“Whenever the founder stays on the board, that always presents a tricky problem,” said Hillary Sale, a law professor who specializes in corporate governance at Washington University in St. Louis.  “Add to that the complexity of a founder who came and went and now wants to come back again. That is messy.”

Thomas Lee • 612-673-4113