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Best Buy Buyout Hopes Dim on Black Friday

From the first indication of Schulze take-private interest, the prospects of a deal have seemed sketchy at best.

That is especially true given the price tag of Best Buy and Schulze's reluctance to put out a formal offer. In fact, Schulze's machinations resemble those used by activist investor Carl Icahn when opening tender offer campaigns that can stretch months without resulting in a deal.

Unfortunately, the company's calendar third quarter earnings, which showed a disappointing net loss of $13 million, or 4 cents a share, and a 4.3% drop in same store sales, only give investors more reason to be skeptical of Schulze's motives in slow-playing a takeover deal.

With Best Buy having agreed to open its books to Schulze and media reports that private equity giants are lining up for a bid on the electronics retailer, time is of the essence. Cash and cash equivalents at the retailer have fallen to $309 million, from over $2 billion a year ago. Meanwhile, the headline from Best Buy's Nov. 21 earnings release is equally dire. "Best Buy Confirms Significant Decline in Fiscal Third Quarter 2013 Earnings," writes the company.

In Schulze's case, he still needs to submit a valid offer for shareholders to even consider.

Having worked at the retailer for nearly 50 years, the company's founder has a strong hand yet to play in any turnaround pitch to shareholders, financiers and private equity funds. But after making his initial proposal, Schulze now needs to drum a Best Buy bid, which may match the discounting spirit seen in the company's shoppers on Friday.

-- Written by Antoine Gara in New York
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