Report: Best Buy Founder Plans To Bid $5-$6 Billion For Company
Once a dominant force in the home electronics market, Best Buy’s dominance has diminished in recent years as consumers visit its stores to try out products, then order them at lower prices online at sites such as Amazon.com. The company is about to come full circle back to its 1966 beginnings, however, as company founder Richard Schulze has obtained financing to purchase the company. Schultze plans to bid between $5 billion and $6 billion—a dramatic drop from the $8 billion estimate he initially appraised the company in August.
Upon the announcement of Schulze’s bid for the company, Best Buy shares rose 14.5 percent to $13.99 in mid-afternoon trading, giving the retailer a value of $4.71 billion.
Schultze previously stated he would fund the deal with a combination of private equity and debt financing, as well as investing his own equity in the company. Already the largest shareholder, Shutlze currently holds a 20-percent stake in the company.
According to the Star Tribune, Schultze has secured financing from private equity firms Cerberus, Leonard Green & Partner and the Texas Pacific Group.
Analysts believe shareholders would like to sell their stake to Shultze at at 40 percent premium over current stock price—at least $17 a share. Should the Best Buy board reject Schultze’s initial bid, he can make a second offer in January.
[Image via SeanPavonePhoto/Shutterstock]
I want more stuff like this!