Best Buy (BBY) Heads In the Wrong Direction As Schulze Could Move to Take Company Private
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Best Buy Co. Inc. (NYSE: BBY) is under heavy pressure Thursday after Founder/Chairman Richard Schulze announced plans to step down from the Board immediately instead of waiting until the 2013 annual meeting. With the news, Schulze also announced plans to explore options with his 20.1 percent ownership in the electronic retail giant.
Some believe the move could suggests that Schulze could dump his stock, hence the downside pressure in the stock. However, at least one analyst doesn't think this will be the case. JPMorgan analyst Christopher Horvers said Schulze is not going to dump the shares and the move was "political in nature"
Going further, the move by Schulze has local paper StarTribune suggesting that Schulze could try to take the company private. The article, quoting an analyst, said to take the company private he may have to overcome two big challenges. The first would be to limit his influence over the company and the second would be to offer investors at least $30 a share, or a 58 percent above the current price.
While this may be the case, given the free-fall in the stock, investors may opt to sell-out for much less than the $30 per share being discussed. Also, if Schulze can successfully lead a private equity buyout, he can have as much influence as he wants current shareholders would likely say.
Either way, the downside pressure in the stock today could suggest investors are reading the wrong signals. Buyout rumors could drive this one higher in days to come.
Some believe the move could suggests that Schulze could dump his stock, hence the downside pressure in the stock. However, at least one analyst doesn't think this will be the case. JPMorgan analyst Christopher Horvers said Schulze is not going to dump the shares and the move was "political in nature"
Going further, the move by Schulze has local paper StarTribune suggesting that Schulze could try to take the company private. The article, quoting an analyst, said to take the company private he may have to overcome two big challenges. The first would be to limit his influence over the company and the second would be to offer investors at least $30 a share, or a 58 percent above the current price.
While this may be the case, given the free-fall in the stock, investors may opt to sell-out for much less than the $30 per share being discussed. Also, if Schulze can successfully lead a private equity buyout, he can have as much influence as he wants current shareholders would likely say.
Either way, the downside pressure in the stock today could suggest investors are reading the wrong signals. Buyout rumors could drive this one higher in days to come.
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