Best Buy Offer Values Company at $8.84 Billion; Biggest Leveraged Buyout of 2012?
A Best Buy offer has valued the company at $8.16 billion to $8.84 billion. That equates to between $24 to $26 per share. That valuation has left many analysts uncomfortable that the price is inadequate for the world's largest consumer electronics chain.
Best Buy Co Inc founder Richard Schulze offered to take the company private on Monday, sparking rumors the biggest leveraged buyout of the year so far was on the cards.
The offer has surprised some who remember that Schulze was forced out as chairman less than three months ago. He was ousted after a probe by a board committee adjudged that he had failed to report to the board about allegations of personal misconduct by then-CEO Brian Dunn.
Schulze already owns 20.1 percent of Best Buy's stock.
The news of the offer saw Best Buy shares rise up 11.5 percent to $19.67 on Monday afternoon.
Anthony Chukumba, analyst at BB&T Capital Markets, has told Reuters, "It is a different conversation if it is at least $30 a share and you have got your equity financing lined up and you have got your debt financing lined up. That is where shareholders, I think, might say 'You know what, let's just take the money and run."
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The electronics giant has been struggling recently, with a series of store closures as well as job cut backs. In an effort to turn things around the company has been trialling a new store format to see if business will pick up with a revamp of its current image.
"My feeling is that being private would give them more of an opportunity to experiment, try new things outside the glare of quarterly reports," said New York-based retail consultant Walter Loeb, according to Reuters.