Shares of Best Buy Co. Inc. (NYSE: BBY) have just dropped right before the closing bell. The word is out that founder Richard Schulze is considering alternatives to a formal buyout plan. Whether these market rumors turn out to be real or not, 24/7 Wall St. has been worried more and more each month that the reality is that Schulze either cannot acquire the company due to a lack of enthusiasm from financiers or that he will just choose not to acquire the company based upon it being in a no-win situation. We would treat this solely as a market rumor until more data is out.
There are currently few details to rely on regarding this market chatter. Shareholders have also begun to lose faith as noticed by the stock not holding on to gains after word of a buyout first surfaced.
Perhaps the largest question that any investor or any analyst would ask is what exactly Best Buy would gain by not being public. If the aim is solely not to have to report quarterly earnings and sales figures, perhaps this is a very expensive way around serious work. If private equity gets involved, they will ultimately want an exit strategy. The threats from Amazon.com Inc. (NASDAQ: AMZN) will still be there in the months and years ahead, and competing pressure from other retailers is going to be there.
So, what “alternatives” would be considered? Maybe Schulze will just want to take control with a majority stake. Maybe Schulze will still want to be involved in the company without a formal buyout.
Best Buy shares fell shortly before the close from just under $16 to $15, and the formal drop for the day is about 2% with an unofficial closing price of $15.12.