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Fitch: Operational, Market Factors Complicate Successful LBO Chance for Best Buy



  Fitch: Operational, Market Factors Complicate Successful LBO Chance for Best
  Buy

Business Wire

NEW YORK -- November 08, 2012

Fitch Ratings believes significant challenges stand in the way of completing a
leverage buyout (LBO) of Best Buy Co., Inc. (NYSE: BBY), according to a report
published today.

Fitch estimates the private holders would need to realize an exit multiple in
the low-4x range to earn a 20% IRR. This is based on current Bloomberg
consensus estimates (used to build a Base Case model), which project an EBITDA
decline of almost 16% from LTM levels through 2017, on a sales decline of
2.4%.

Fitch's expectations are more conservative than consensus estimates. If the
decline in same-store sales remains in the negative 3%-negative 5% range, as
it has over the last four quarters, EBITDA is likely to be further pressured
and consensus estimates could prove to be optimistic.

Fitch also notes that retail sector LBOs are typically unsuccessful, unless a
retailer has strong positioning within its category and the ability to grow
market share on an ongoing basis in a segment that is characterized by minimal
growth and heavy competition. Adding leverage to a pressured business has only
added to a company's woes given the significant high fixed costs and thin
margins of the business.

The full report, 'Best Buy LBO - Significant Hurdles Remain' is available at,
'www.fitchratings.com.' The report also includes a detailed debt
organizational structure and summary covenant analysis for the company's
domestic debt.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Best Buy LBO -- Significant Hurdles
Remain

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692990

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Monica Aggarwal, CFA
Senior Director
monica.aggarwal@fitchratings.com
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Augustinus Wong
Director
augustinus.wong@fitchratings.com
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com
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