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Best Buy Co., Inc. Message Board

  • sfsamlee sfsamlee Nov 30, 2012 9:53 PM Flag

    Financing not the issue, big investors buying in, looking good thus far...

    Financing doesn't seem to be the issue for the buy-out based on a recent article in a Minneapolis newspaper. Suggested that it is more about control of the company. If it pops after some holiday sales figures, I expect to see a major short squeeze to $15 range. Then hopefully a buy-out offer will be on the table by mid to late December.

    Sentiment: Strong Buy

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    • Moreover, Best Buy's weak Q3 may paradoxically be a boon for shareholders by clarifying the company's value. Whereas many analysts initially thought that Schulze's intended buyout range of $24-$26 was too low to succeed, with shares having fallen below $12, a buyout offer around $18 per share is now likely to garner sufficient support from shareholders and directors. This still offers a premium of more than 50% on the current share price. At $18, it should be much easier for Schulze to line up sufficient equity and debt financing for a buyout. If he retains his 20% stake, Schulze would need to secure less than $5 billion of capital at $18/share.

    • Therefore I believe that private equity firms will be receptive to Richard Schulze's leveraged buyout plan. A report last week stated that Schulze is currently working with Cerberus Capital, TPG Capital, and Leonard Green Partners. In Schulze, Best Buy has a highly motivated suitor; as the share price has plunged by nearly 75% over the past two years, Schulze has seen his net worth drop by about $2 billion. (Schulze owns approximately 20% of Best Buy.)

      Moreover, Best Buy's weak Q3 may paradoxically be a boon for shareholders by clarifying the company's value. Whereas many analysts initially thought that Schulze's intended buyout range of $24-$26 was too low to succeed, with shares having fallen below $12, a buyout offer around $18 per share is now likely to garner sufficient support from shareholders and directors. This still offers a premium of more than 50% on the current share price. At $18, it should be much easier for Schulze to line up sufficient equity and debt financing for a buyout. If he retains his 20% stake, Schulze would need to secure less than $5 billion of capital at $18/share. :0}

      Sentiment: Strong Buy

 
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