Morning Commentary: American Realty moves lower; LabCorp shares down on acquisition news

By Rebecca Melvin

New York, Nov. 3 – American Realty Capital Properties Inc.’s convertibles were hit again and actively traded early Monday after word that the New York-based real estate investment company’s deal to sell Cole Capital to RCS capital Corp. has fallen through.

Last week, American Realty’s convertibles and other securities were torpedoed by the company’s announcement of accounting errors, which made financial statements appear better than they actually were.

American Realty’s 3% convertibles due 2018 tumbled another 5.5 points to 85.5 in heavy volume, according to Trace data early Monday. Last week, the bonds fell to the lower 90s from the upper 90s.

American Realty’s 3.75% convertibles due 2020 dropped by an even greater magnitude on less volume to 84.

American Realty shares were down 64 cents, or 7%, to $8.22.

American Realty owns and acquires single-tenant freestanding commercial real estate.

Laboratory Corp. of America Holdings’ 0% convertibles due 2021 didn’t appear to have traded early Monday after news that the health care diagnostics company has agreed to buy Covance Inc. in a deal worth about $6 billion. LabCorp shares fell 7% in early action.

Under the agreement, Covance shareholders would receive about $75.76 in cash and 0.2686 of a LabCorp share for each Covance share. The combined consideration of about $105.12 a share represents a premium of about 32% over Covance’s closing price on Friday.

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