Best Buy names new chief as takeover talks fail
Tip News - 2012/08/20       A+ A-

Electronics retail chain Best Buy named a new chief executive specialized in turnarounds Monday after talks for former CEO Richard Schulze to buy the company failed amid rancor between the two sides.

Best Buy named Hubert Joly, previously head of travel group Carlson, to lead the company as CEO and president as it struggles to keep up with the growth of online competitors to its big-box consumer electronics stores.

Joly, a native of France, "has developed a track record of successful turnarounds and growth in the media, technology and services sectors," Best Buy said in a statement.

His background includes stints at consultancy McKinsey & Company, Electronic Data Systems (EDS) and Vivendi, where he ran Vivendi Universal Games.

"Hubert's range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies," said chairman Hatim Tyabji.

The announcement came a day after Best Buy said talks had failed with founder Schulze, who had proposed to buy the company over and take it private.

Saying it was focused on protecting shareholders, Best Buy blamed Schulze for providing "insufficient information to make a reasonable conclusion" on his offer, which valued the company at around $8.8 billion.

It faulted "the conditional nature of the proposal and Mr. Schulze's failure to date to disclose financing and equity partners."

Schulze retorted Monday that Best Buy's board was to blame, criticizing its demand for a freeze on any major initiatives after a takeover.

"The board initially proposed an 18-month standstill, which was completely unacceptable in light of the fact that urgent change is needed at Best Buy and value is eroding further every day that change is not effected.

"We were in the process of negotiating an acceptable standstill period when, without notice to me or to any of my advisors, the board issued its announcement.

"I am shocked by this course of action but as the largest shareholder of Best Buy, I remain hopeful that the board will engage in good faith discussions with us for the benefit of shareholders, employees and customers."

Schulze, who owns about 20 percent of the big box chain, proposed earlier this month to buy the shares he does not already own at between $24 and $26 per share.

The shares, which had jumped to above $20 after his offer, slumped more than seven percent in opening trade Monday to $18.80.

The global electronics chain, like other brick-and-mortar rivals, is struggling against competition from online retailers and plans to close 50 US stores by the end of 2012.

Best Buy swung into loss in its fiscal 2012 year that ended March 3, losing $1.23 billion compared to a gain of $1.28 billion the previous year.

Schulze, who founded Best Buy in 1966, stepped down as chairman in June after the losses, but has said he has a plan to turn the company around without pressure from minority shareholders.

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