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Best Buy (BBY) turned down a $1B minority investment proposal from three P-E firms, according to...

Best Buy (BBY) turned down a $1B minority investment proposal from three P-E firms, according to Reuters. The deal would have placed Leonard Green Partners, Cerberus Capital Management, and TPG Capital in the boardroom. BBY +5.1% premarket following earnings.
Comments (5)
  • lanettedonovan1
    , contributor
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    As CEO said on call " turned down investment from PE firms because would be dilutive to current shareholders" this means they valued the stock a discount to where it is now. PE had all the inside data.....
    1 Mar 2013, 09:32 AM Reply Like
  • ML610
    , contributor
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    That's not what it means at all. Take a look at the 52 week range. The spoken about offer price would have been dilutive to that; not so much to todays price. This is why the stock would jump each time someone wrote an article about Schulze being close.

     

    How's that liquidation of assets going for them by the way??
    1 Mar 2013, 10:04 AM Reply Like
  • lanettedonovan1
    , contributor
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    I sense you think asset sales -like real estate- is bad - not at all. I raises cash and rationalizes the business. They will divest of real estate which includes long term lease agreements. They wrote down goodwill by 800 million ( recorded as an asset on the BS).

     

    As what they mean by diluting shareholders: The PE firms would be issued new shares of stock. Currently there are 338 million share outstanding. So here is example: If the expectation is to earn $ 2.00 a share in FY2014 that = $ 676 in net income ( 2x 338). If they issued $1 billion in stock at $17. per share = 59 million new share) this assumes that it would be straight common not preferred with a dividend seniority ( unlikely). So after issue, shares outstanding would be 397 ml. So claim of current shareholders on EPS would go to $1.70 ("diluting earnings"). With the same PE of 8x then stock price would adjust to $13.60. THIS IS WHAT IT MEANS TO DILUTE SHAREHOLDERS.
    2 Mar 2013, 09:14 AM Reply Like
  • ML610
    , contributor
    Comments (87) | Send Message
     
    They're not renewing expiring leases. It's an expense reduction not an asset sale. You keep writing that this company has liquidity issues which isn't even close to a true statement.
    3 Mar 2013, 09:52 AM Reply Like
  • lanettedonovan1
    , contributor
    Comments (31) | Send Message
     
    Ok take us through your numbers on this please
    4 Mar 2013, 03:25 PM Reply Like
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