Best Buy Company Inc
) has modified its earlier agreement with the company's founder
and former chairman, Richard Schulze. The company stated that it
has agreed to extend the offer deadline for Schulze, thereby
providing him ample time to pursue his plan of buying the
beleaguered retail chain.
With the amendment, Schulze will now have the chance to
propose his offer on or after February 1, 2013through February
28, 2013. Moreover, the company stated that it would evaluate and
decide upon the offer within 30 days.
Earlier in August, Best Buy agreed to open its financial
statements to Richard Schulze. As per the agreement, Mr. Schulze
would have access to certain due diligence information and
alongside would be allowed to form an investment group with
private equity sponsors in order to take the company
private. Further, he will receive two board seats for
possessing 20.1% ownership stake in the company.
In June, Richard Schulze, stepped down from his position after
serving for almost four decades in the company. Prior to that,
Best Buy's CEO, Brian Dunn, resigned abruptly, following an
internal probe regarding his improper relationship with a female
Best Buy has long been struggling with dwindling sales in key
categories including televisions, notebooks, digital imaging and
gaming devices, which in turn, is taking a toll on the company's
same store sales results.
Moreover, heightened competition from online retailers like
), is adversely affecting its sales and profitability as online
retailers are gradually encompassing new merchandise categories
under their purview and offering huge discounts on products with
free shipping services to attract customers.
Currently, we have a long-term Underperform recommendation on
the stock. Moreover, Best Buy, which faces competition from
Wal-Mart Stores Inc
), holds a Zacks #5 Rank that translates into a short-term Strong
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