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What: Shares of electronics retailer Best Buy shot up as much as 19% today on news that founder Richard Schulze would make a bid to buy the company for $5 billion to $6 billion, according to the Minneapolis Star Tribune.
So what: Schulze had originally made rumblings about a buyout offer back in August when he said he could take over the company at a price of $24 to $26 a share, much higher than its current value. However, he appeared to have trouble getting financing at that price, which would have been near $10 billion. Schulze, who founded the company back in 1966, remains the biggest shareholder with a 20% stake in the company, and claims to have full financing at the new offer price. He will submit an offer to the board by Dec. 16.
Now what: If the deal ends up going through, investors will likely consider this "too little, too late." A near-20% bounce in the share price is always nice, and shares could go up another 20% if Schulze's offer is at the high end of the stated range, but most shareholders will wind up taking a loss. The stock is still down nearly 50% from its 52-week high in March, and was worth almost $16 just a month ago. Who knows what Schulze has planned for Best Buy as a private company, but the big-box retailer still seems like a boondoggle no matter whose hands it's in.
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The article Why Best Buy Shares Popped originally appeared on Fool.com.
Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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