Shares Of Best Buy Up 17% After A Star Tribune Report

Shares of Best Buy shot up 17% on Thursday as it became more and more evident that the founder of the company, Richard Schulze may have been arranging for finances to purchase the consumer electronics retailer.

Schulze would be bidding for at least $5-$6 billion.

Schulze’s bid would, however, be less than his initial offer in August. He had said that he would purchase Best Buy for $24-$26 per share. Taking debts into account that would have amounted to $10.9 billion.

Best Buy shares have seen consistent drop since the month of August. Last month Best Buy had reported a drop in sales figure in same-stores. This is the ninth time in the past 10 quarters.

The size of such a prospective agreement, along with the poor performance of Best Buy in the past two years, has got many people on Wall Street doubting that the deal can ever happen.

R J Hottovy, an analyst at Morningstar said that there is enough skepticism regarding the fact that Schulze would be able to arrange finances for such a big deal. He also said that since the share price has gone up, the deal stands a chance now.

He was not sure about the investors or the board of Best Buy proceeding with such a proposal.

Some shareholders, however, have showed interest in hearing what Schulze has to say.

Chief executive of Dalton, Greiner, Hartman, Maher, & Co., Bruce Geller thinks that the company can make things work and Schulze is capable of putting his best into it.

As reported by the Star Tribune, Schulze is supposed to meet his top advisers, including a former chief executive of Best Buy, Brad Anderson and a former president of the same, Al Lenzmeier.

Schulze had founded the company in 1966. He is planning on funding the deal with the combination of debt financing and private equity. Also, he is keen on reinvestment of some of his own equity in Best Buy.