December 13, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronics retailer Best Buy (NYSE: BBY ) shot up as much as 19% today on news that founder Richard Schulze would make a bid to buy the company for $5 billion to $6 billion, according to the Minneapolis Star Tribune.
So what: Schulze had originally made rumblings about a buyout offer back in August when he said he could take over the company at a price of $24 to $26 a share, much higher than its current value. However, he appeared to have trouble getting financing at that price, which would have been near $10 billion. Schulze, who founded the company back in 1966, remains the biggest shareholder with a 20% stake in the company, and claims to have full financing at the new offer price. He will submit an offer to the board by Dec. 16.
Now what: If the deal ends up going through, investors will likely consider this "too little, too late." A near-20% bounce in the share price is always nice, and shares could go up another 20% if Schulze's offer is at the high end of the stated range, but most shareholders will wind up taking a loss. The stock is still down nearly 50% from its 52-week high in March, and was worth almost $16 just a month ago. Who knows what Schulze has planned for Best Buy as a private company, but the big-box retailer still seems like a boondoggle no matter whose hands it's in.
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