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Best Buy-out: Wait 'til 2013?

August 27, 2012: 11:53 AM ET

Today's agreement just kicks the can down the road.

FORTUNE -- Best Buy founder and former CEO Dick Schulze now has an opportunity to buy the troubled electronics retailer. But it's still going to be very difficult to do so in 2012.

Minneapolis-based Best Buy (BBY) this morning announced that it has agreed to let Schulze see the company's books, and to put together an investor group (something otherwise prohibited by Minnesota law). This comes after weeks of back-and-forth negotiations, much of which has taken place via press release.

The problem, however, is that Schulze still has just 60 days to present a fully-financed deal to Best Buy once he begins due diligence. He should be able to get private equity sponsors on board by then -- including co-investments -- but the banks could be a tougher sell.  Remember, we're probably talking about $5 billion to $6 billion in debt here, and sources tell me that lenders are likely to want at least some earlier holiday sales data before committing.

Sixty days, however, won't even bring Schulze to Halloween (not exactly the holiday my sources were talking about). He may be entitled to a 30-day extension, meaning that his offer would have to be submitted on Friday, November 23. Perhaps he can get access the first few hours of Black Friday figures to the bankers, and send in his offer at 5pm.

Again, it's possible that Schulze pulls the financing together in time. But the likelihood is low.

By the way, do not think this timing is coincidental. Best Buy has been very clear about not wanting to negotiate throughout the critical holiday season, fearing that it would distract employees.

So here's my guess as to what happens: Schulze either doesn't submit a qualified offer in 2012, or submits one that includes certain material adverse change (MAC) terms related to holiday sales. Either way, Best Buy's board will probably reject the offer, thus setting the stage for Schulze to submit a revised offer in January 2013 -- possibly bringing it directly to shareholders if unable to receive board approval.

Best Buy stock is up more than 6% today, on news of the Schulze agreement. I hope the new buyers aren't planning to get taken out in 2012.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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