Morning Commentary: inContact surges on buyout news; planned Allegheny Technologies deal on tap

By Rebecca Melvin

New York, May 18 – inContact Inc.’s 2.5% convertibles due 2022 surged 23 points on an outright basis, and expanded on swap, in very active trade early Wednesday after news that the Salt Lake City-based cloud software company is being acquired by NICE Systems for $940 million in cash.

The inContact 2.5% convertibles, of which $115 million priced in March 2015, traded up to about 120 from about 97 last. inContact shares surged $4.84, or 54%, to $13.85.

The bonds expanded about 5.5 points on a swap basis if holders were on a 65% delta, a New York-based trader said. “Nice win for hedge guys.”

Under the terms of the agreement, inContact stockholders will receive $14.00 per share in cash. The per share purchase price represents a 55% premium to the closing price on Tuesday, and a 49% premium to the 30-day volume weighted average price, according to a company news release.

In primary market action, market players were sizing up Allegheny Technologies Inc.’s planned $250 million offering of six-year convertible senior notes, which launched late Tuesday. Allegheny’s common shares were down $1.45, or 10%, to $12.72 in the early going Wednesday on the heels of the deal launch.

The notes are talked at a 4.25% to 4.75% coupon and a 25% to 30% initial conversion premium and are slated to price after the market close.

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