Best Buy Co (NYSE:BBY) has a takeover problem. Roger Schulze who holds 20% of the shares has made a take-over offer. Sort of. He can’t prove that he has the financial backing to pull the deal off. Credit Suisse will only give him a highly confident letter which probably cost plenty but obligates nothing. Credit Suisse also has to explain to potential financiers why its a good idea to back Roger Schulze now after his own board made him walk the plank. Oh by the way retail is not exactly the best place to be. tough story to sell.
Best Buy’s board has some unique Minnesota law that allows them to consider many other factors in addition to the official take-over offer. Minnesota has a populist dare I say Social Democratic world view. Unlike Delaware law Minnesota law allows for the interests of employees and other stakeholders to be considered.
So the corporate governance obligations are different. Most shareholders have bought and selling Best Buy for years and had no practical working knowledge of this quirk. I dare say there will not be a stampede to Minnesota to incorporate new business. A few may even leave as boards of directors may not like the hoops Minnesota makes you jump through.
The bottom line will still be financial. What is in the best interests of Best Buy shareholders. The company is in difficulty. The now ousted founder who still owes 20% is trying to make an offer but cannot put it together, at least for now. The board needs to prove its usefulness and show how it taking care of the shareholders. As Best Buy is in distress they will need to demonstrate how they will take care of other stakeholders.
At the present time they have nothing they can go public with. Hopefully the back room machinations are in high gear and a recovery plan is under assembly. But right now the responsibility sits with the board of directors.
George Gutowski writes from a caveat emptor perspective.
- Minnesota Minefield for a Best Buy Deal (dealbook.nytimes.com)
- Why Richard Schulze Won’t End Up Owning Best Buy (seekingalpha.com)