Best Buy (BBY) founder Richard Schulze is attempting to find a management team to lead Best Buy for a potential going private transaction. While the lack of clear strategy to compete with Amazon is extremely worrisome for shareholders (among the reasons I don’t own BBY) record low interest rates might just make a buyout of BBY feasible. Best Buy has to have an extremely lean cost structure and focus on benefiting consumers through installation, servicing, etc, to differentiate itself from Amazon. Meanwhile the company must leverage a very competitive online business with its retail footprint to provide itself the best opportunity to maintain market share. Obviously this is easier said than done but for the right private equity firm a deal could make sense as an opportunity to cut fat, and milk the free cash flows. I don’t believe that in the current economic environment BBY shareholders would see much of a premium from the current price but if the company’s operations improve, a more buoyant economic outlook could eventually lead to a reasonable bid down the line. It will certainly be an interesting business case study to watch how online business is impacting formerly dominant electronics retailers.
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