Buy-out price reset to $16.96 based on revised free cash flow projection
In August, BBY mgt had projected minimum free cash flow at $1.25B. Schulze then proposed a $25 buy-out price, or $8.4B. This was based on Price/Freecashflow of 6.7x. Applying the downward revision on free cash flow of $850M, the new buy-out PT is 6.7x$850M=$5.7B, or $16.96 per share, a 41% premium from current PPS.
Agreed! I would add that Schultz WILL make the bid NOW, as he cannot wait for cash flow to drop further. He (and his bankers) agree that the company has huge turnaround potential as a private company, and waiting for cash flow to drop further only complicates matters - as the probability for a turnaround begins to diminish. In addition, PPS vs cash flow has reached the penultimate balance of risk vs. reward for private equity. The buyout story is definitely in play.....now more than ever..,.imo.