As the Best Buy Turns
Daytime dramas have nothing on Best Buy. Let’s recap:
- The consumer electronics chain has seen market share steadily decline in recent years as its stores turn into showrooms for Amazon.com and others that undercut it on price.
- Former Best Buy CEO Brian Dunn, who is alleged to have carried on an inappropriate relationship with a female subordinate including the possible misuse of company funds, resigns abruptly.
- Best Buy founder Richard Schulze announces he will step down as chairman of the company in late June after it is learned that he knew of the former CEO’s alleged misbehavior and failed to report it to the board.
- Deciding not to wait until the end of the month, Mr. Schulze resigns from the board on June 7 and announces he will "explore all available options," which many interpret as finding a way to take the company back. As the largest shareholder in the company with a 20.1 percent stake, many think Mr. Schulze will attempt to do just that.
"To some extent, people are saying to themselves maybe what he is doing is he is getting off the board so he can team up with some private equity guys and make a run at the company," BB&T Capital Markets analyst Anthony Chukumba, told Reuters.
JPMorgan analyst Christopher Horvers said the one thing he doesn’t expect to see happen is Mr. Schulze looking to "dump" his stake in Best Buy. According to the Pioneer Press, Mr. Horvers expects Best Buy’s founder to try and regain "greater control over the strategic direction of the company."
If private equity doesn’t work out, there is also the possibility that Mr. Schulze could look to enlist other shareholders in the company to push current members of the board out to regain control and choose Best Buy’s next CEO.
"We don’t know what [Mr. Schulze’s announcement] means, but I guess we’ll find out," Bruce Hight, Best Buy’s spokesperson, told the Star Tribune. "We certainly appreciate his past contributions, which were immense. But the company’s going to proceed forward with plans that it has already announced."
- Best Buy founder exits — for now – Star Tribune
- Best Buy founder resigns, puts large stake in play – Reuters
- Best Buy’s Richard Schulze resigns from board; could be mulling leveraged buyout – Pioneer Press
Discussion Questions: How do you think Best Buy’s boardroom drama is affecting the rest of the company? What would be the best case scenario for Best Buy going ahead now that Richard Schulze has resigned from the board?