Best Buy Announces Strategic Growth Plans, Including Initial Acquisitions and International Expansion.Business Editors
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MINNEAPOLIS--(BUSINESS WIRE)--Dec. 7, 2000
Best Buy Co., Inc. (NYSE NYSE
See: New York Stock Exchange :BBY BBY Best Buy (stock symbol)
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BBY BeBeyond (Chinese online community) ) today announced it has agreed to acquire Minneapolis-based Musicland Stores Corporation (NYSE:MLG MLG Major League Gaming (e-sports organization)
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MLG Marine Logistics Group (US Marine Corps) ) for $685 million (includes assumption of $260 million in debt) and Seattle-based Magnolia Hi-Fi, Inc. for $87 million. Best Buy also announced its initial international expansion plans. The Company has signed eight leases in Canada and expects to open approximately 65 stores throughout Canada over a three-year period.
"These strategic moves position Best Buy to grow profits through new customers, new channels of distribution and improved operating efficiencies. The acquisitions allow us to deliver digital entertainment technologies to consumer segments not currently served by Best Buy's store format, particularly in rural areas, malls and the early technology adopters," said Richard M. Schulze Richard M. "Dick" Schulze is the Founder and Chairman of Best Buy.
He was born and raised in St. Paul, Minnesota where he graduated from Central High School, afterwards attending Marquette University (he did not graduate). He subsequently spent time in the U.S. , Best Buy Founder, Chairman & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Musicland's leading mall position, combined with our opportunity to transform their product offerings to include MP3 players, cellular, satellite systems, digital imaging, gaming and expanded accessories, will allow Best Buy to capitalize on Cap´i`tal`ize on`
v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the strength of the digital product cycle."
Best Buy's Schulze will lead the combined companies as Chairman & CEO. Musicland CEO Jack Eugster will join Best Buy's Board of Directors, and Musicland Group senior officers will remain within the combined companies. Best Buy Senior Vice President Kevin Freeland will be promoted to President of Musicland Stores Corporation.
"Kevin Freeland has a proven track record of success and 20 years of retail experience. He developed our world class inventory management systems, played a leading role in Best Buy's process to profits initiative, and was instrumental in developing this acquisition strategy," Schulze said.
The Musicland acquisition is expected to close in the first calendar quarter of 2001. Best Buy will tender an offer of cash for stock in the amount of $12.55 per share. Magnolia Hi-Fi will be acquired in a cash transaction and is expected to close mid-December. Both acquired companies will continue to operate autonomously as wholly owned subsidiaries Wholly Owned Subsidiary
A subsidiary whose parent company owns 100% of its common stock.
In other words, the parent company owns the company outright and there are no minority owners. .
Musicland Group, established in 1956, is the number one mall-based retailer of pre-recorded home entertainment products. The company's more than 1,300 retail stores attract over 300 million customer visits each year. Musicland employs 14,000 people in 49 states, including Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and the US Virgin Islands under the names: Sam Goody Sam Goody is a music and entertainment retailer in the United States and formerly in the United Kingdom. It is owned and operated by Musicland, which itself is owned by former rival Trans World Entertainment which also runs Suncoast Motion Picture Company and, until January 2006, , Suncoast, Media Play and On Cue. The company reported revenues of $1.89 billion and earnings of $58.4 million for its year ended December 31, 1999.
Musicland CEO Jack Eugster said, "We share a common Midwestern heritage and a passion for retail. This acquisition is a good strategic fit, which builds on our solid music foundation while providing an exciting opportunity to transform our stores. Retention of talent is a priority within both organizations and creates new possibilities for employee development."
Seattle-based Magnolia, founded in 1954, is a privately held chain of 13 high-end audio High-end audio is a term used to describe equipment that is purported by the manufacturers to be the best, regardless of the price. Definition of 'high-end'
High-end audio and video stores. Magnolia is widely regarded as the premier specialty retailer in the consumer electronics industry, and has won the Audio/Video International "Dealer Of The Year" award more times than any retailer in the US. The company's revenues were nearly $100 million for 1999. Jim Tweten will continue as Magnolia's President, reporting directly to Best Buy's President & COO Brad Anderson. Tweten is also president of the Pro Buying Group, a collection of high-end, specialty retailers focused on the installation, delivery and service of technology products. Thomas Conrad will continue as Magnolia's Senior Vice President & COO.
Magnolia President Jim Tweten said, "This acquisition is an ideal fit for our company because it combines the capital and successful growth of Best Buy with the high-end market and service skills of Magnolia. This will provide Magnolia with the growth capital to further establish our market presence and brand strength while providing enhanced employee development opportunities."
The Company believes that the Canadian market will support approximately 65 Best Buy stores. Management anticipates opening up to 15 stores in Canada in fiscal 2003. Best Buy Senior Vice President Tom Healy Tom Healy was an Irish sportsperson who is best remembered for playing hurling with Thurles Sarsfields in the 1880s.
Tommy Healy was born in Coolcroo, County Tipperary. He was noted as a fine sportsperson and he played hurling with his native Thurles club in the 1880s. will head up the Canadian operation. Healy joined Best Buy in 1990 and led the Company's expansion into the Southeast. Most recently, he was responsible for more than 30 stores generating $1.2 billion in annual revenues. "International expansion allows us to build on our domestic success in becoming a worldwide leader in technology and entertainment products," Best Buy's Schulze said.
Schulze added, "Best Buy's vision is to be at the intersection of technology and life. To realize this vision, we must come to market using a variety of branding concepts and operational formats. This growth strategy accelerates the implementation of our vision through new customer segments and substantiates our presence as the world's preeminent technology and entertainment player."
Best Buy will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. EST EST electroshock therapy.
electroshock therapy (8:00 a.m. CST CST
1. Central Standard Time
2. convulsive shock treatment
CST Central Standard Time
Noun 1. ) today. The conference call numbers are (612) 332-0107 or (612) 332-0802, and the passcode is 553039. The conference call and presentation will be available simultaneously and in its entirety through a webcast at http://investor.bestbuy.com. A replay of the call will be available beginning at approximately 11:30 a.m. EST today through midnight Monday, December 11. The webcast with presentation materials will be archived on Best Buy's Investor Relations Investor relations
The process by which the corporation communicates with its investors. site.
Statements made in this news release, other than those concerning historical financial information, should be considered forward looking and subject to various risks and uncertainties. Such forward-looking statements are based on management's beliefs and assumptions regarding information currently available, and are made pursuant to the "safe harbor Safe Harbor
1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.
2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The Company's actual results could differ materially from those expressed in the forward-looking statements. Factors that could cause results to vary include, among others; those identified in the Company's filings with the Securities and Exchange Commission. The Company has no obligation to publicly update or revise any of the forward-looking statements that may be in this news release.
This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Musicland Stores Corporation. Musicland Stores Corporation stockholders are advised to read the tender offer statement and the solicitation/recommendation statement regarding the acquisition referred in this news release, which will be filed with the SEC. The tender offer statement (including an offer to purchase, letter of transmittal Letter of Transmittal
A document used by security holder to accompany certificates surrendered in an exchange or other corporate action. and related tender offer documents) and the solicitation/recommendation statement will contain important information, which should be read carefully before any decision is made with respect to the offer. Musicland Stores Corporation stockholders will be able to obtain a free copy of the tender offer statement, the solicitation/recommendation statement and certain related documents when they become available from Best Buy and Musicland Stores Corporation and at the SEC's Web site at www.sec.gov.
About Best Buy Co., Inc.
Minneapolis-based Best Buy Co., Inc. (NYSE:BBY) is the nation's number one specialty retailer of consumer electronics, personal computers, entertainment software and appliances. The Company reaches consumers nationwide through its more than 400 retail stores located in 41 states and online at http://www.bestbuy.com/.
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