International analysis: Best Buy aims to stabilise as clock ticks on buyout

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US consumer electronics specialist Best Buy has reached an agreement to satisfy recent requests from founder Richard Schulze in connection with his offer to take the retailer private.

Speculation on Best Buy’s future ownership has been swirling for months

Schulze will now be granted access to “certain due diligence information and given permission to form an investment group with private equity sponsors in furtherance of making a fully financed proposal to acquire the company”. As part of the deal, Schulze has agreed not to pursue an acquisition until January 2013.

The news should help to dampen down the speculation regarding future ownership that has been swirling around the retailer in recent months – at least until next year when it is sure to be reignited. Best Buy has also acted to increase stability by installing a new chief executive, replacing Brian Dunn who left earlier this year and whose exit was subject to an internal investigation regarding his personal conduct prior to his announced departure.

The new chief executive, Hubert Joly, has been described as a ‘turnaround expert’. Best Buy chairman Hatim Tyabji explained: “Hubert was an outstanding candidate for this position and I am confident he will be a great fit for Best Buy.

“Hubert’s range and depth of experience in transforming companies is exactly what the retailer needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.”

However, concerns have been raised externally about Joly’s experience and credentials to lead the world’s largest consumer electronics retailer. Many have pointed out Joly’s lack of retail experience – he joins from global hospitality company Carlson.

Controversially, it was also revealed that Joly will be eligible for a mutli-million-dollar payout even if he cannot obtain a visa to take up the post (he is French).

The coming months will tell whether Joly can prove the critics wrong and can work to improve Best Buy’s performance in its key home market. Certain initiatives are already on the cards, such as a ramping up of Best Buy Mobile store numbers to about 800 in the near future, as well as reducing the size of its US superstore sales area by about 10% in the next three to five years.

However, the question is how long Joly will be given – speculation over the retailer’s ownership will return next year and Schulze is sure to be watching with interest.