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With M&A Popping, More Deals Lie Ahead: Best Buy Co., Inc. (BBY), Deckers Outdoor Corp (DECK), Apollo Group Inc (APOL)

Deckers Outdoor Corp (NASDAQ:DECK)

In our last M&A roundup, we identified Deckers Outdoor Corp (NASDAQ:DECK) as a firm that could find a bid. The company reports its winter-quarter earnings this week, which could substantially change the fundamental outlook as we’ll be better able to see if the company’s 2011 weakness was product or weather related. If results are substantially better than expected, we imagine the chances of a bid would fall considerably. However, if results are just in line and not a complete disaster, we believe a bidder could emerge.

Everyone’s favorite retail acquirer, V.F. Corporation (NYSE:VFC), doesn’t necessarily look like a buyer, in our view. VF Corp runs its segments sort of like Berkshire does, allowing managers to work autonomously, while the firm uses its enormous buying power to lower cost of goods sold and its scale to lower production costs. Given Deckers’ major input is sheepskin, we’re not sure how much of an advantage Uggs can gain under the VF Corp umbrella. We think a private-equity buyer looks more likely at this time.

Best Buy Co., Inc. (NYSE:BBY)

Best Buy Co., Inc. (NYSE:BBY) has been a likely takeover candidate for some time, but we think odds of a deal getting done are reduced every time the stock rises—shares are up 40% year-to-date. Given the large amount of time that has passed since founder Richard Schulze announced he would bid and the fact that we haven’t yet seen a bid, we think financiers are unlikely to throw capital at this deal.

We at Valuentum can’t necessarily blame them, as Best Buy has seen its margins, free cash flow, and long-term business outlook decline considerably during the past few years. Still, this is one deal that we wouldn’t be surprised to see happen. We’ll be keeping a close eye on Best Buy.

The article With M&A Popping, More Deals Lie Ahead originally appeared on and is written by RJ Towner.

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