Best Buy (BBY) on Monday announced that it has reached an agreement with the company’s founder Richard Schulze that permits him to form an investment group and conduct due diligence. The Board of Directors is also prepared to offer Schulze two Board seats. The founder was given 60 days to propose a fully financed definitive agreement to the company, however if the proposal is rejected Schulze will not be able to pursue an acquisition until January 2013. Best Buy’s announcement comes shortly after the company named Hubert Joly its CEO and formally rejected Schulze’s initial takeover bid. Best Buy’s press release follows below.
Best Buy Board and Founder Richard Schulze Reach Agreement Permitting Schulze To Form Investment Group And Conduct Due Diligence
Minneapolis, Aug. 27, 2012 – Best Buy Co., Inc. (NYSE: BBY) and founder Richard Schulze today announced that they have reached an agreement under which Mr. Schulze will be granted access to certain due diligence information and permission to form an investment group with private equity sponsors in furtherance of making a fully financed proposal to acquire the Company.
Best Buy stated that the agreement establishes a non-exclusive, orderly process which satisfies the requests made by Mr. Schulze, while at the same time protecting the interests of all shareholders.
Mr. Schulze stated that he was pleased that an agreement was reached which will allow him to conduct the due diligence he had sought.
The agreement, which will be filed with the SEC as part of Mr. Schulze’s updated 13-D filing, provides the following:
Immediate due diligence access to non-public Company information for Mr.Schulze, his advisors, potential private equity partners and debt financing
An opportunity to bring forward a fully financed definitive proposal within 60 days after the due diligence period begins, which period may be extended in certain circumstances; and
A waiver of Minnesota law in order to allow Mr. Schulze to work with his private equity partners to develop a definitive proposal to be presented to the Board of Directors of Best Buy.
If a transaction is proposed and the Board of Directors rejects such proposal, Mr. Schulze has agreed not to pursue an acquisition until January 2013.
However, if the first transaction proposal is rejected, Mr. Schulze would have the opportunity to present a second transaction proposal beginning in January 2013. The Board of Best Buy would have 30 days to review the second transaction proposal before Mr. Schulze would have the opportunity to take an offer directly to shareholders at the 2013 annual meeting or at a special meeting. If Mr. Schulze is unsuccessful in getting his offers approved by the Board or by the shareholders, then he has agreed not to pursue an acquisition until the expiration of the one year term of the agreement.
The Board has also committed to offer Mr. Schulze two Board seats, proportionate to his share ownership. If he presents a transaction proposal to shareholders or if he materially violates the standstill provisions of the cooperation agreement, he will no longer be allowed to obtain the two Board seats.
There is no guarantee that Mr. Schulze will be successful in arranging a potential offer, or that such an offer would be accepted by the Board of Directors.