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The discount on Best Buy’s stock keeps getting deeper.
Shares of the struggling electronics chain tumbled 13 percent yesterday, hitting their lowest levels in a decade as the retailer swung to a loss on a steeper-than-expected sales decline.
The stock drop, which left Best Buy shares down 49 percent on the year at $11.96, likely cut the price for a leveraged buyout by founder Richard Schulze, according to sources.
As reported by The Post, Best Buy’s board lately has adopted a friendlier tone toward Schulze, who in August offered to buy the company for $24 to $26 a share, or more than $8 billion.
With Best Buy’s sales and margins dropping, sources said CEO Hubert Joly last week signaled that the company would be open to going private for $20 a share, valuing it at $6.7 billion.
After yesterday’s dismal news, however, some investors speculated that a deal could get done at an even lower price.
Likewise, speculation is rising that a revised offer from Schulze might come this month, well before an extended due diligence period is set to expire in mid- to late December.
“The bad news they were waiting for has come,” said one Best Buy investor, referring to yesterday’s dismal earnings report and stock decline.
A spokesman for Schulze didn’t respond to a request for comment.
Schulze is seeking support for his bid from private-equity firms including Cerberus Capital Management, TPG and Leonard Green Partners, with the latter two seen likely to bid together, sources said.
Despite reports that Schulze is struggling to find backers, a bigger problem may be structuring a deal in which he retains control of the company, said one source.
Best Buy swung to a fiscal third-quarter loss of $13 million as sales tumbled 3.6 percent to $10.75 billion, hit by cutthroat competition with Amazon and sluggish demand for TVs, laptops and digital cameras.
On a call with analysts yesterday, Joly admitted it will be a “hard road” to turn around the retailer’s operations.
Weakening cash flow could also complicate a leveraged buyout. The company cut its forecast for annual cash flow to at least $850 million, down sharply from its August forecast for at least $1.25 billion.
Last week, Joly outlined a plan that includes matching prices at Amazon and other rivals to curb “showrooming,” in which shoppers check out products at Best Buy before purchasing them at lower prices online.