UPDATE 4-Best Buy shares rise on report Schulze will make bid

Thu Dec 13, 2012 7:04pm EST

(Adds closing price)

Dec 13 (Reuters) - Best Buy Co Inc shares rose as much as 19 percent on Thursday after the Minneapolis Star Tribune reported that company founder Richard Schulze will make a fully financed offer to take the company private by Saturday this week.

The retailer's stock touched a high of $14.48 before closing at $14.12 on the New York Stock Exchange.

Schulze is expected to submit his formal offer of at least $5 billion to $6 billion to Best Buy's board before the Dec. 16 deadline, the newspaper in Best Buy's home state of Minnesota reported, citing an unnamed source.

Schulze's bid at that level would be well below his initial offer range in August, when he said he could acquire Best Buy for $24 to $26 per share, or a total of $8.16 billion to $8.84 billion. Including debt, it would be as much as $10.9 billion.

Since August, Best Buy shares have fallen 40 percent, and last month Best Buy reported a decline in same-store sales for the ninth time in the last 10 quarters.

The size of such a potential deal, combined with Best Buy's weak performance in the last two years, has made many on Wall Street doubt it could get done.

"There was skepticism in the market that he could get financing for the deal," Morningstar analyst R.J. Hottovy said, adding that the share price has increased now that there is a greater possibility of getting a deal done.

Still, he was not sure that Best Buy's board or investors would go for such an offer, which would come to about $15 to $18 a share.

But some investors said they are at least willing to hear Schulze out.

"I think the company can be turned around and I think he's as good a person as any to do it," said Bruce Geller, chief executive at New York-based investment management firm Dalton, Greiner, Hartman, Maher & Co in New York.

A representative for Schulze did not immediately respond to a request for a comment. Best Buy declined to comment.

Schulze will meet with his top advisers, including Brad Anderson, a former Best Buy chief executive, and Al Lenzmeier, a former president, in Minnesota on Thursday and Friday, the Star Tribune reported.

Schulze, who founded Best Buy in 1966, has said he would fund any deal through a combination of private equity and debt financing, as well as the reinvestment of some of his own equity in the company. He is Best Buy's biggest shareholder, with 20 percent ownership.

Last month, sources told Reuters that at least three private equity firms - Apollo Global Management LLC, TPG Capital Management LP and Leonard Green & Partners LP - were considering joining Schulze in the bid.

Best Buy's dominance has faded in recent years as consumers increasingly use its big-box stores to browse and try out products, then buy them online at Amazon.com Inc or other websites. (Reporting by Phil Wahba, Olivia Oran and Dhanya Skariachan; Editing by Jeffrey Benkoe and Gunna Dickson)