Trading for Best Buy Co. stock opened at $21.60 on Monday morning after founder Richard Schulze released his plan to purchase the company at $24 to $26 per share.
Buying at $21.60 turned out to be a bad trade. By midmorning, shares were trading under $20 (still above Friday's close of $17.64).
Skeptics could argue that Schulze didn't exactly say he had the money to fund his proposed buyout, instead offering assurances that his financial adviser, Credit Suisse, was "highly confident" of securing the necessary loans. Schulze said he could "in short order" firm up commitments from equity investors, adding that he would provide a good portion of the equity himself.
It's hard to imagine a businessman of Schulze's stature signing a letter like that without near-certainty that he could perform. So the better question is whether the market anticipates a more attractive proposal than $26 per share, the top end of what Schulze proposed. At a last trade of $19.99, the answer is no.
So the board of directors at Best Buy should take Schulze up on his offer.
Of course, the board can't immediately agree to a deal without much more work. But today is a good day to begin moving toward a purchase agreement.
Schulze complained that his team hasn't received access to non-public information to complete his due diligence. Best Buy could sign a confidentiality agreement with Schulze and open the flow of information. This doesn't mean that Schulze should be allowed to run freely around his former headquarters, but the sooner Best Buy allows diligence to proceed the sooner the board can judge whether Schulze's financing is solid.
From there, the board's task is really pretty simple -- members have a duty to see that the cash proceeds to shareholders are maximized. In addition to picking the highest value, like any fifth-grade math student, the board will need to show its work.
