Best Buy Co (BBY.N) is forging ahead with its turnaround after it did not receive an acquisition offer from founder Richard Schulze by the deadline they had set, the retailer said on Friday.
The world's largest consumer electronics chain also reported better-than-expected quarterly results, helped by strength in the United States, and its shares rose nearly 6 percent.
The acquisition talks ended after Best Buy turned down a minority investment proposal by Schulze's three private equity partners, which sought three seats on the board, two sources familiar with the situation told Reuters on Friday. The proposed price of the investment at one point hit $1 billion.
Schulze, who made an informal proposal to buy Best Buy for $24 to $26 a share last August, failed to line up necessary debt and equity financing, a source familiar with the matter said.
Shares of Best Buy were trading at $17.35 early on Friday, up 5.7 percent from Thursday's close.
Schulze had until midnight on Thursday to submit a buyout proposal to the retailer's board, a deadline that had already been extended in December to let him include the company's full-year results as part of his due diligence review.
The founder's efforts to negotiate a deal with private equity firms Cerberus Capital Management LP CBS.UL, TPG Capital TPG.UL and Leonard Green & Partners have also come to an end, the source said.
The development would appear to end a months-long quest by Schulze to take private the company he founded in 1966, and free Best Buy to focus on its turnaround.
The deal Schulze proposed in August was valued at $8.16 billion to $8.84 billion, or as much as $10.9 billion if debt was included.
In its first holiday season under Chief Executive Hubert Joly, Best Buy matched competitors' online prices to tackle "showrooming," the retail term for people visiting stores to look at products only to then buy them online for less.
Best Buy also gave additional training to workers at its stores and made a bigger push to sell online.
In February, Barclays analyst Alan Rifkin urged investors to buy Best Buy shares for the first time in almost six years, saying that the retailer was finally taking much-needed steps to improve operations by cutting costs and trying to become more efficient, along with building its online muscle.
Best Buy recently decided to make its holiday price-matching program a permanent year-round policy starting March 3, to fend off online rivals such as Amazon.com Inc (AMZN.O) that often compete on price.
Best Buy's loss narrowed to $409 million, or $1.21 per share, in the fourth quarter ended February 2, from $1.82 billion, or $5.17 per share, a year earlier.
Excluding special items such as restructuring charges, earnings from continuing operations fell to $1.64 per share from $2.18, but exceeded the $1.54 analysts had expected, according to Thomson Reuters I/B/E/S.
Revenue rose just 0.2 percent to $16.71 billion.
Renewed momentum in the United States more than offset softness in international markets, Joly said in a statement.
Sales at U.S. stores open at least 14 months rose 0.9 percent, helped by pre-Super Bowl demand. The days before football's big game are often a popular time for television sales. This year, the game took place on February 3, just one day after Best Buy's quarter ended.
U.S. online revenue jumped 11 percent. Total domestic revenue fell 0.3 percent to $12.55 billion, after the company closed 49 of its big-box stores.
International revenue rose 2 percent to $4.16 billion, while international same-store sales declined 6.6 percent.