Convertibles mostly quiet; XenoPort surges on takeout news; Allegheny Technologies rises

By Rebecca Melvin

New York, May 23 – XenoPort Inc.’s convertibles and shares burst higher on Monday after news that Arbor Pharmaceuticals LLC has received a commitment for new debt to help fund its acquisition of the Santa Clara, Calif.-based biopharmaceutical company.

XenoPort’s 2.5% convertible senior notes due 2022, of which $115 million priced in February, was indicated up to 92.25 from 77 previously as shares rose $2.48, or 56%, to $6.88.

Under the agreement, XenoPort is being bought for $7.03 per share in cash, or a total equity value of about $467 million. Closing is expected in the third quarter, subject to customary conditions, including the tender of more than 50% of all outstanding shares of XenoPort and review by the U.S. Government under the Hart-Scott-Rodino Antitrust Improvements Act.

Elsewhere in biotech, Exelixis Inc.’s convertibles gained in tandem with a 7% increase in the underlying shares of the South San Francisco, Calif.-based biotechnology company after positive trial data related to its cabozantinib cancer therapy.

Meanwhile, Allegheny Technologies Inc.’s 4.75% convertibles continued to improve early Monday, extending gains from Friday after the bond put in a weak debut in the convertibles market on Thursday.

Allegheny’s 4.75% convertibles lifted above par, trading at 101.5 last, which was better on the day by 2.5 points, according to Trace data.

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