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Bondholders Skeptical of Best Buy Offer

Trading in securities with poison put suggests investors dont put much stock in Schulze purchase.

By Mary Childs, Bloomberg | Updated on August 29, 2012

Best Buy Co. founder Richard Schulze says his takeover offer gives the world’s largest electronics retailer its best shot at competing with Amazon.com Inc. and Wal-Mart Stores Inc. Bondholders aren’t convinced.

Best Buy has $1.5 billion of securities that have a so-called poison put, which requires the company to purchase the notes at 101 cents on the dollar in the event of an acquisition combined with a ratings downgrade. A total of $1 billion of that debt is trading as much as 11 cents below that repurchase price, indicating bondholders believe a buyout isn’t imminent.

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