* Schulze can now make bid in February
* Company has 30 days to respond
* Best Buy shares fall 14.2 pct
(Adds analyst comments)
By Dhanya Skariachan and Nivedita Bhattacharjee
Dec 14 Best Buy Co Inc agreed to extend
the deadline to Feb. 28 for founder Richard Schulze to make a
bid for the company, continuing the uncertainty for shareholders
over whether he can put a bid together.
Best Buy shares fell 14.2 percent to $12.12 on the New York
The company said on Friday the extension would allow Schulze
to include the consumer electronics retailer's full-year results
as part of his due diligence review.
The new deadline will also give him more time to line up
partners and financing for a bid. A source told Reuters on
Thursday that Schulze didn't have financing lined up in time for
a December bid.
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.
"Obviously with the extension, there is still some
hesitation on the part of his private equity suitors about how
much financing they would want to put up for this deal,"
Morningstar analyst R J Hottovy said.
Under the extension, Schulze will be able to submit an offer
any time during February, and the company will have 30 days to
review and make a decision on the bid.
In August, Schulze made an informal proposal to 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
But Best Buy's performance has continued to lag and its
stock has slid since. Last month, the company reported a decline
in same-store sales for the ninth time in the last 10 quarters.
Best Buy's fortunes have faltered as consumers increasingly
use its big box stores as showrooms for products they end up
buying online at Amazon.com Inc and other websites.
To add to its troubles, the company forced out Schulze's
protégé, Brian Dunn, as chief executive earlier this year amid
allegations he was having an inappropriate relationship with a
That scandal led to the ouster of Schulze from the board,
and Best Buy hired turnaround expert Hubert Joly as CEO to come
up with its own restructuring plan.
Schulze remains Best Buy's largest shareholder with about
one-fifth of the company's outstanding shares.
If he can come in with a bid at about $16 or $17 a share
when the market thinks the stock is only worth $12, it is in the
interests of shareholders to extend the deadline, Hottovy said.
"That's really the best hope for investors, that Schulze
takes it out because there's been no other good news for the
company," said Rakesh Agrawal, principal analyst at San
Francisco-based consulting firm reDesign Mobile.
Agrawal, who also advises hedge funds and money managers on
the technology sector, said at this point the stock was trading
entirely on whether a deal can get done or not.
A Best Buy spokesman said the extension will not affect the
company's day-to-day operations, especially during the
all-important holiday season.
"We are determined to have a strong holiday season," both in
stores and online, spokesman Matt Furman said, adding that the
company was moving "full speed ahead" with its turnaround plan.
(Writing by Brad Dorfman; Additional reporting by Olivia Oran
in New York, and Siddharth Cavale in Bangalore; Editing by