Morning Commentary: Illumina convertibles trade ahead of earnings; FelCor rises on merger news

By Stephanie N. Rotondo

Seattle, April 24 – Illumina Inc.’s 0% convertible notes due 2019 were being eyed early Monday as investors prepared for the genome-sequencing company’s earnings.

The earnings will come on Tuesday.

Ahead of the results, the 0% convertibles were seen at 102.

At those levels, a trader said the paper was trading with a 45% premium and a negative 0.9% yield to maturity.

The underlying equity (Nasdaq: ILMN) was up nearly 2% in early dealings.

Meanwhile, FelCor Lodging Trust Inc.’s $1.95 series A cumulative convertible preferreds (NYSE: FCHPrA) were gaining ground on news the real estate investment trust was being acquired by RLJ Lodging Trust.

The convertible preferreds were up 62 cents, or 2.52%, at $25.21. The common stock (NYSE: FCH) was up 50 cents, or 6.97%, at $7.82.

The deal is valued at $1.18 billion, or $8.54 per each share of FelCor stock – a 16.7% premium over Friday’s closing share price.

Under the terms of the taxable merger, FelCor shareholders will receive 0.362 of a share of RLJ stock for each of their shares.

The merger will create one of the largest REITs in the United States. Once completed, RLJ will own about 71% of the combined entity and FelCor stockholders will own the remainder.

© 2015 Prospect News.
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