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 The original title of this piece was “No ‘Star’ For the Star-Tribune,” but that seemed a little obscure,because what this virtual column is really about is not so much the MinneapolisStar-Tribune—a newspaper that, like all newspapers, has seen its glory dayscome and go.
 Rather, it is about the ability of somebody with an agenda (the agenda, inthis case, seeming to be the promotion of Best Buy founder Richard Schultz’s dream ofrecapturing his baby) by getting stuff planted in the mainstream media pretty muchany time he or she wants to, regardless of its merit. At least that’s how it appears to us based onthe repeated speculation—Speculation With A Capital “S,” since none of it has provenaccurate, in the sense of actually happening so far—that has appeared inthe paper about Schultz’s purported plans ever since he got kicked off the BestBuy board last spring. Exhibit A is the Star-Tribune report thatappeared last Thursday morning as follows: Best Buy Co. founder Richard Schulze will makea fully financed offer to purchase the consumer electronics giant by the end ofthe week, possibly on Friday, the Star Tribune has learned.  Schulze will submit a formal proposal to theboard of directors before a "hard" deadline of Sunday, said onesource. The offer is expected to be at least $5 billion to $6 billion.—Thomas Lee, MinneapolisStar-Tribune 12/13/12 That breathless bit of “news” was picked upimmediately on CNBC, Bloomberg and elsewhere, sending Best Buy’s share price soaringtwo points, or 15%, on unusually heavy volume of 44 million shares, by day’send. Unfortunately, the very next morning realitysmacked the stock in the head with a 2-by-4 when Best Buy announced it wasgiving Schultz somewhat more time to make a bid than the above-reported “end ofthe week” (they postponed it to after the holiday season), causing the stock todrop right back down to where it had started the day before the 15% spike. Here’s how the Star-Tribune managed to bothbackpedal on its Thursday morning scoop andsuggest better things to come: Best Buy Co. and its founder, Richard Schulze,have agreed to push back the deadline for Schulze to make an offer to buy thecompany, leading some analysts to speculate that Best Buy is more willing tomake a deal.—Thomas Lee, MinneapolisStar-Tribune 12/14/12 So the shmucks who on hadbought millions of shares of Best Buy as high as $14.48 after reading the Star-Tribune (or the news outlets that picked up the story) Thursday morning lost $2 ashare before they had time to spit out their coffee after reading the Star-Tribune Friday morning, whenthe stock opened for trading at $12.46. Now, that was not the first time theStar-Tribune had passed along what turned out to be a bum steer relating to BestBuy.   Since at least last April the paper has beenquoting “sources,” “a source,” “one source,” “two sources” or “an analyst” instories surrounding the potential for a Best Buy takeover, or a DickSchultz-led leveraged buyout, or both. And, as of this writing, not only has neither a takeover or leveraged buyout occurred, one has not even been announced. What follows is a timeline, with the pertinentquotes along with the closing price of Best Buy shares the day the articleappeared.   Wehighlight in bold particularly juicy or over-the-top statements, such as“There are people swarming all over this,” “It’s not going to take long,” and "Richard Schultz will make a fully financed offer," statements for which the averageStar-Tribune reader should be forgiven for assuming they meant something good wasgoing to happen to Best Buy’s share price, and soon.
 We also highlight a pertinent quote from an analyst who knows a thing or two about retailing that those same Star-Tribune readers ought to have paid more attention to (“I'vetalked to several private equity firms, and no one will touch it”).
 As in the abovequotes, all articles contain the byline of one Thomas Lee:

April 18, 2012/$22 Best Buy Co., in the midst of an investigationof former CEO Brian Dunn, may have other trouble to fend off. The Minnesota-based retail giant has become analluring target for a private takeover, according to industry sources. Thenation's largest consumer electronics chain generates more than $1 billion incash a year and has relatively little debt.Such an effort may wellbe a long shot, but over the past year, Best Buy's stock price has lost morethan half of its value, making an acquisition less expensive to a potentialbuyer.A takeover of Best Buy"is on a lot of people's radar screens," said Jeremy Brunelli, aretail analyst with Consumer Edge Research in Stamford, Conn. "Best Buy isan obvious candidate. There's a definite buzz going on"…. Investors arecontacting people with connections to Best Buy to seek their help in exploringa buyout bid, a source with close ties to the company confirmed. "There are people swarming all overthis," said the source, who declined to name those parties.June 8, 2012/$20 Richard Schulze's resignation from Best Buy'sboard Thursday sets the stage for a potentially divisive battle for thecompany's future, one that pits the founder against the very people herecruited to lead the struggling Minnesota giant…. Schulze, Best Buy's largest shareholder, saidhe is giving up his board seat and chairmanship early to "explore allavailable options" for his 20.1 percent stake in the company. Thoseoptions include a venture to reclaim control of the company by acquiring itthrough private investment, according to two sources close to the situation. Schulze has already hired a top lawyer inNew York to assist in such an endeavor, the sources said.June 8, 2012/$20"I've talked toseveral private equity firms, and no one will touch it," said ColinMcGranahan, a retail analyst with Sanford Bernstein & Co…. And while $9 billion is certainly a lot ofmoney, it wouldn't be anywhere near the largest private buyout of a retailer inthe United States. That distinction belongs to the $17 billion acquisition ofsupermarket chain Albertsons by Cerberus Capital Management, CVS and EdenPrairie-based Supervalu Inc. And while food retailing is a low-margin,low-growth business, Best Buy still generates plenty of profits and cash fromconsumer electronics and services. Schulze also has the advantage of not startingfrom scratch. Thanks to his 20 percent stake, Schulze would just need private investors to contribute around $500million to $1 billion and the rest he could borrow from the debt markets,according to an analyst with a major institutional investor in Best Buy. Theindividual requested anonymity because he was not authorized to speak to thenews media.June 27 ($20): Schulze was said to be talking with CreditSuisse among other firms, but it was unclear if, or when, he might make a move. According to sources close to the situation,Schulze would install his own management team if he regained control of thecompany, in which he still holds a 21 percent stake.August 8 ($20) BestBuy Co. Inc. founder Richard Schulze has recruited four big-name private equityfirms -- KKR & Co., Leonard Green & Partners, TPG Capital and ApolloGlobal Management -- to help bankroll his $8.8 billion plan to buy the company,the Star Tribune has learned. Collectively, the group would provide $3billion to $4 billion to back Schulze's bid, with the rest coming from debtfinancing and Schulze's own 21 percent stake in the Richfield-based company.Sources close to Schulze said he may also tap a strategic investor who, forexample, might want Best Buy to sell certain products or services.August 27 ($18) Now that Best Buy Co. will let founder RichardSchulze peek at its books, Schulze will likely present a formal buyout offer tothe board of directors in early September. "It'snot going to take long," said a source close to Schulze, who requestedanonymity because of the sensitive nature of the negotiations. On Monday, Best Buy and Schulze said theystruck a deal that allows Schulze to review the company's financial records andformally form a buyout group, which has 60 days to present a proposal to theboard. The company is currently setting up a"data room," where Schulze and his investors can examine Best Buy'sfinancial records. After that, he willmake an offer "within days to a week," the source said.
November 6 ($15) An initial offer willlikely come next week after CEO Hubert Jolypresents his strategy to investors in New York, according to a source close toSchulze. Of the eight potential investors that expressed interest in financingSchulze's bid, the final buyout group will probably include one to threeinvestors, the source said, who addedSchulze's team has already completed a preliminary business plan…. The source close to Schulze said he wasoriginally prepared to offer $25 a share. But given Best Buy's declining marketvalue of late, Schulze might initially offer $18 to $19 a share, which theboard will reject, he said."I guarantee theywill say no," the source said. Schulze could then make a second offer inJanuary for $21 or $22 a share, the source said. "Ifyou want the killer blow, you have to be close" to Schulze's originalrange, he said.December 13 ($12.18 to 14.12) BestBuy Co. founder Richard Schulze will make a fully financed offer to purchasethe consumer electronics giant by the end of the week, possibly on Friday,the Star Tribune has learned. Schulze will submit a formal proposal to theboard of directors before a "hard" deadline of Sunday, said onesource. The offer is expected to be at least $5 billion to $6 billion."This is going down to the wire," the source said. Over the past weekend, Schulze and his teamsecured agreements to finance the deal from bankers and private equityinvestors, which includes Cerberus, Leonard Greene & Partner and the TexasPacific Group, the source said. Schulze will meet with his top advisers,including former CEO Brad Anderson and former president Al Lenzmeier, inMinnesota on Thursday and Friday as they prepare to move forward. Best Buy declined to comment on Wednesday. Founded by Schulze as a single store in St.Paul in 1966, Best Buy has grown into a global retail powerhouse with more than$50 billion in annual sales and more than 100,000 employees. While it remains unclear how much Schulze willoffer for the company, investors expect the bid to be much lower than the rangeof $24 to $26 per share that Schulze first outlined over the summer. Since lateJune, Best Buy stock has fallen 45 percent, closing Wednesday at $12.20 pershare. The recent stock plunge surprised Schulze somuch that he requested a 30-day extension from the original deadline ofmid-November to see how Best Buy's holiday numbers would hold up, sources said. At this point, institutional investors andanalysts speculate that shareholders would be open to selling their stake toSchulze, although they would prefer at least $17 per share, a 40 percent premiumover the company's current stock price.December 13 ($12.18 to $14.12) Over the past weekend, Schulze and his team secured agreements to finance a buyout deal frombankers and private equity investors, which include Cerberus, LeonardGreene & Partners and the Texas Pacific Group, according to a source closeto Schulze. On Thursday, Schulze met with his top advisers, including formerBest Buy CEO Brad Anderson and former president Al Lenzmeier, in Minnesota asthey prepare to move forward, the source said. Talk on Thursday quickly turned to twoquestions: How much will Schulze offer investors and will Best Buy's board ofdirectors accept or reject? Under the original negotiating terms betweenSchulze and Best Buy, Schulze can make a second offer in January if the boardrejects his initial bid. Some institutional investors have said theywould sell their stakes for as little as $16 to $19 a share. But other analystssuspect Schulze will need at least $20 a share.December 14 ($14.12 to$12.05)Best Buy Co. and itsfounder, Richard Schulze, have agreed to push back the deadline for Schulze tomake an offer to buy the company, leading some analysts to speculate that BestBuy is more willing to make a deal.
Warren Buffetthas been buying up a lot of newspapers lately. We’re not sure if this kind of track record would make his cut.
Jeff MatthewsAuthor “Secrets in Plain Sight: Business and Investing Secrets of WarrenBuffett”(eBooks on Investing, 2012)   Available now at Amazon.com
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