Akamai greenshoe lifts 0.125% convertibles due 2025 to $1.15 billion

By Wendy Van Sickle

Columbus, Ohio, May 22 – The initial purchasers for Akamai Technologies Inc.’s 0.125% convertible notes due 2025 fully exercised their $150 million over-allotment option on Monday, increasing the total deal size to $1.15 billion, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company priced $1 billion of the convertibles after the market close on May 16 with an initial conversion premium of 27.5%.

Price talk had been for a coupon of 0% to 0.25% and an initial conversion premium of 27.5% to 32.5%.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC. and BofA Merrill Lynch were the joint bookrunners for the Rule 144A deal.

The notes are non-callable.

The notes have a contingent conversion feature until Jan. 1, 2025 and will be convertible thereafter with no contingencies at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Conversions will be settled in cash, shares or a combination of both at the company’s option.

In connection with the pricing, Akamai entered into convertible note hedge and warrant transactions.

Approximately $46.2 million of the net proceeds will be used for a share buyback with the price per share equal to Wednesday’s closing price of $74.59.

Proceeds will be used to cover the cost of the call spread, for the share buyback and to repay at maturity the company’s $690 million of outstanding 0% convertible notes due Feb. 15, 2019.

Akamai is a Cambridge, Mass.-based content delivery network and cloud service provider.

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