Five9 in focus after Zoom merger failure; Guardant Health down, NeoGenomics up on buyout

By Abigail W. Adams

Portland, Me., Oct. 1 – The convertibles secondary space saw an active start to the third quarter as equities rebounded strongly after a nearly weeklong rout.

Following a volatile early session, equities were strong into Friday’s close.

The Dow Jones industrial average closed the day up 484 points, or 1.43%, the S&P 500 index closed the day up 1.15%, the Nasdaq Composite closed the day up 0.82%, and the Russell 2000 index finished up 1.69%.

The 10-year Treasury yield dropped below 1.5%, giving some relief to growth stocks pressured by rising rates.

Topical news, primarily about merger and acquisition activity, was a driving force of trading activity.

Five9 Inc.’s 0.5% convertible notes due 2025 were in focus after shareholders rejected the company’s merger with Zoom Video Communications, Inc.

While the notes were active, they were little changed following the news.

Guardant Health Inc.’s 0% convertible notes due 2027 were active and trading down on an outright and dollar-neutral basis following news the company was considering making a bid for fellow convertible issuer NeoGenomics Inc.

While Guardant Health’s 0% convertible notes were taking a hit on the news, NeoGenomics’ convertible notes were making gains.

Five9 notes eyed

Five9’s 0.5% convertible notes due 2025 were in focus on Friday following news shareholders had rejected the company’s merger with Zoom Video.

While active, the notes were largely unchanged.

The 0.5% convertible notes were changing hands at 136 versus a stock price of $162.28 early in the session, according to a market source.

They traded up to 138 as stock jumped alongside the broader market heading into the market close.

There was about $20 million in reported volume.

Five9’s stock wavered between gains and losses early in the session but saw a strong close.

Stock traded to a high of $170.73 and a low of $157.17 before closing the day at $167.26, an increase of 4.71%.

In July, Zoom announced it planned to acquire Five9 in an all-stock transaction with Five9 shareholders receiving 0.5533 of a share of Zoom stock for each Five9 share.

However, Zoom’s stock has been on a downward trajectory since the company reported earnings in late August.

While Five9’s stock and convertible notes jumped after the merger was initially announced, Five9 looks good as a stand-alone company, a source said.

NeoGenomics improves

While Guardant’s 0% convertible notes due 2027 were taking a hit on news the oncology testing company was considering making a bid for NeoGenomics, NeoGenomics’ convertible notes were making gains.

Guardant’s 0% convertible notes dropped 12 points outright with stock off more than 14%.

They were changing hands at 103 in the late afternoon.

The notes contracted on the move down and were in about 1 point dollar-neutral, a source said.

Guardant’s stock traded to a low of $102.01 and a high of $118 before closing the day at $107.50, a decrease of 14.01%.

NeoGenomics’ 0.25% convertible notes due 2028 were boosted by the news.

The notes gained about 5 points outright to trade around 105 in the late afternoon.

They expanded about 0.5 point dollar-neutral on the way up, a source said.

While less active, NeoGenomics’ 1.25% convertible notes due 2025 were also making gains on an outright basis and were marked as high as 156.

While NeoGenomics’ stock was up as much as 12% at the market open, stock closed the day largely flat.

Stock traded to a high of $54.74 and a low of $48.35 before closing the day at $48.49, an increase of 0.52%.

Bloomberg reported that Guardant Health was considering making a takeover offer for NeoGenomics with the companies holding talks about a potential deal.

Mentioned in this article:

Five9 Inc. Nasdaq: FIVN

Guardant Health Inc. Nasdaq: GH

NeoGenomics Inc. Nasdaq: NEO

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