Best Buyout: Best Buy Founder Considers Buyout

Best Buy founder Richard Schulze wants to take his company private in the hopes of preserving its value after a tumultuous year, including an internal investigation that revealed his knowledge of an alleged affair involving former CEO Brian Dunn, which he failed to tell other members of the board.

Schulze, the electronic retailer's largest shareholder, with slightly more than a 20% stake valued at $1.4 billion, resigned as chairman and a director of the Richfield, Minn., retailer earlier in June to consider the options and is working with Credit Suisse Group.

“A move to take the company private wouldn't be easy. Best Buy's 'enterprise value,' or stock market value plus its debt, minus any cash on hand, is about $8 billion," the Wall Street Journal reports. "A buyout offer would likely have to approach $11 billion to entice other shareholders to sell, analysts say.”

Schulze founded the company 46 years ago with one stereo store called the Sound of Music and built the brand into what’s still the world's largest electronics retailer by revenue, even as stiff competition has caused lagging sales for the past two years and by the end of 2012, the company plans to close 50 of its 1,100 U.S. stores.

The decision to change the threshold for calling a special shareholder meeting to conform to Minnesota laws solidified the schism between Schulze and the board. "They are clearly locking him out," commented M&A lawyer Kenneth Lefkowitz to Reuters. He said the change in by-laws was "absolutely" a takeover defense.”

Schulze's options include litigation or an offer to buy the company. "That's the way you get boards to act. You may either make a (public) tender offer or you make a (private) proposal, assuming he has the money, etc. to do it," added Lefkowitz.

Meanwhile, Best Buy’s public face, in keeping with the spirit of it founder, includes expanding its mobile brand in China and highlighting U.S. college tech entrepreneurs with a back-to-school campaign — ‘The Dorm Room Innovators’ — and an underlying message that ‘when the technology’s right, anything can happen.

Since then, the campaign has highlighted Soccket, a project by two young women who developed a soccer ball that generates electricity through play; a group at Arizona State University who created a device that allows people to climb wall; and Lauren Berger, whose InternQueen.com helps students find and apply for internships while educating them on getting the most out of their experience.

It may be the end of an era for big-box stores, but it’s just the beginning of iterating that legacy into virtual entrepreneurship.