No bid soon by Best Buy ex-chairman: source
(Reuters) - Best Buy Co Inc's (BBY.N) former Chairman Richard Schulze is not expected to present a buyout or other proposal to the company's board anytime soon, a person familiar with the situation said, putting a damper on market expectations that a move might be imminent.
Shares of electronics dealer Best Buy rose more than 10 percent on Monday morning to $23.56 on growing talk that Schulze was planning a buyout offer, but fell back to $22.13, or up 5.6 percent, on word the bid was unlikely to come soon.
Discussions around a leverage buyout are still in the early stages, the person said.
Schulze, who founded Best Buy and still owns more than 20 percent of its shares, abruptly resigned from the company's board in June and said he was exploring options for his ownership stake. He lost his chairman title after a probe by a board committee found that he had failed to tell the board about allegations that former CEO Brian Dunn had engaged in an improper relationship with a female employee.
Sources told Reuters last week that Schulze was working with banks, including Credit Suisse (CSGN.VX), to explore a potential private takeover of the world's largest electronics retailer. The Minneapolis Star Tribune first reported that Schulze was working with Credit Suisse.
Credit Suisse declined to comment on Monday. A representative for Schulze and Best Buy declined to comment.
Investors could be looking for a trade into what they may consider a short-term "win-win" scenario, where either Schulze makes a buyout offer or the company presents an aggressive turnaround plan, said Brian Sozzi, chief equities analyst at NBG Productions, in New York.
But Sozzi also said the company was going to take "a lot of work" to turn around and questioned whether Schulze would be able to find financing for a bid.
The company, a bellwether for the consumer electronics industry, has posted declines in same-store sales in seven of the last eight quarters. It has also been criticized for being too slow to react to a changing retail world, where some shoppers use Best Buy as a "showroom" to try out electronics and then buy the same items at lower prices online.
One source told Reuters last week that Schulze may be waiting for the company, under interim CEO Mike Mikan, to unveil a turnaround strategy in September, though another source said that Schulze could act sooner if he lines up financing for a deal.
(Reporting by Nadia Damouni in New York and Brad Dorfman in Chicago; Editing by Jan Paschal and Tim Dobbyn)
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