Best Buy Pops Higher on Schulze Takeover Report
Shares of Best Buy (NYSE: BBY) traded sharply higher, up about 18 percent on Thursday, after the Minneapolis Star Tribune reported that the company's founder and former chairman, Richard Schulze, is expected to make a bid to take the company private.
Schulze resigned from his post on the Best Buy board back in June.
Since resigning, Schulze has been attempting to raise the financing to purchase the company outright and take it private. Schulze personally owns roughly 20 percent of the electronics retailer.
In August, Schulze released a letter stating that he was willing to purchase Best Buy outright for around $24-26 per share. Perhaps it is best that he was unable to get the financing back then, as shares have since plummeted in value.
Even with Thursday's pop, shares of Best Buy are still down more than 40 percent year-to-date.
Some traders may have had advanced knowledge of the Star Tribune report, as shares of the retailer began to trade higher after-hours Wednesday on seemingly no news. Shares began to rally just after Wednesday's close, and were up over five percent.
Much of Thursday's pop might be attributable to short covering, as the retailer has a relatively high short float.
Later in the morning session, shares of Best Buy pulled back somewhat, on speculation that a bid not be as forthcoming as believed. CNBC's David Faber stated that Schulze may wait to see Best Buy's holiday sales before finalizing an offer.
Best Buy's fall in 2012 has perhaps been one of the most dramatic of the year. Former CEO Brian Dunn was embroiled in a sex scandal in April, a scandal which ultimately led to his resignation.
Meanwhile, the secular trends slowly eroding Best Buy's business model seem to have accelerated this year. Both earnings and sales have trended lower, capped by a horrific third quarter.
After Schulze left, the board brought in Hubert Joly to take the reins as CEO. Joly is known to be a turnaround specialist, but has no direct experience in retail.
Shares of Best Buy traded near $13.90 on Thursday.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.