inContact surges on swap after takeout news; Tesla gains ahead of secondary offering news

By Rebecca Melvin

New York, May 18 – inContact Inc.’s convertibles gained in active trade on Wednesday, benefitting both hedged and outright convertibles players, after news that the company is being acquired.

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

The bonds expanded about 5.5 points on a swap basis if holders were on a 65% delta, a New York-based trader said.

The big gain was especially welcome since hedged players suffered losses on Anacor Pharmaceuticals Inc.’s convertibles after they surged on an outright basis, but contracted on swap, on Monday after news that Pfizer Inc. agreed to buy the Palo Alto, Calif.-based biopharmaceutical company for about $4.5 billion in cash.

“It offsets losses in that cash takeover the other day,” a market source noted of inContact.

Elsewhere, LinkedIn Corp.’s convertibles continued to trade actively at essentially unchanged pricing as headlines swirled around the Mountain View, Calif.-based business-oriented social networking service regarding new information about a 2012 data breach. The LinkedIn 0.5% convertibles due 2019 traded flat at 93.6 on Wednesday, according to Trace data, with shares also little changed at about $129.50.

Tesla Motors Inc.’s convertibles traded higher in active trade on Wednesday before the Palo Alto, Calif.-based electric car maker announced a secondary offering of $2 billion of common stock after the market close. Shares were off about 1% in after-hours action at $209.00.

Tesla’s 0.25% convertibles due 2019 traded up to 93.5 in Wednesday’s regular session from about 91 to 91.5 on Tuesday.

Tesla’s 1.25% convertibles due 2021 traded up to 88.25 from about 86 previously.

Tesla’s 1.5% convertibles due 2018 traded last at 171.50, which was up from 168 previously.

In other after-hours action, Salesforce.com shares jumped 6% after the cloud software company released earnings that beat estimates and raised its revenue guidance.

Salesforce’s 0.25% convertibles due 2018 were last at 128.3, which was up about a point on the day. Shares closed at $77.87, which was up $1.10, or 1.4%.

Also after the bell, Repligen Corp. launched an overnight offering for $100 million of five-year convertible senior notes that was talked to yield 1.625% to 2.125% with an initial conversion premium of 22.5% to 27.5%, according to market sources.

The registered, off-the-shelf deal has a $15 million greenshoe and was being sold via bookrunner Jefferies & Co.

Also in the primary market, market players were sizing up Allegheny Technologies Inc.’s planned $250 million issue of six-year convertible senior notes, which priced after the market close.

The company priced $250 million of the six-year convertible senior notes at par to yield 4.75% with an initial conversion premium of 25%, according to a company news release.

Bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and BofA Merrill Lynch.

The convertibles were talked to yield 4.25% to 4.75% with a 25% to 30% premium, according to market sources.

Allegheny’s common shares fell $2.61, or 18.4%, to $11.56 on the heels of the deal launch.

inContact expands on takeout

The inContact convertibles surged to about 120 from below par, so it was a nice move for convertible outright holders and it also happened to do well for hedged players who made about 5.5 points, sources said.

“It was a nice win for hedge guys,” a New York-based trader said.

The convertible issue is small at just $115 million, however, and that may have played a part in the fact that it gapped up so many points on swap, another trader said.

Meanwhile, a third source noted that there may not have been many hedged players but that it was a great win for the outrights.

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 more than 50% to $13.83.

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.

Repligen to price

Repligen launched an overnight offering of $100 million of five-year convertible senior notes that is expected to price before the market open on Thursday.

The notes were talked with a 1.625% to 2.125% coupon and a 22.5% to 27.5% initial conversion premium.

The registered, off-the-shelf offering has a $15 million greenshoe and was being sold via bookrunner Jefferies & Co.

According to a company news release, the offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

Waltham, Mass.-based Repligen is a bioprocessing company focused on the development, production and commercialization of products used in the production of monoclonal antibodies, recombinant proteins and vaccines.

Mentioned in this article:

Allegheny Technologies Inc. NYSE: ATI

Anacor Pharmaceuticals Inc. Nasdaq: ANAC

LinkedIn Corp. Nasdaq: LNKD

Repligen Corp. Nasdaq: RGEN

Salesforce.com Inc. NYSE: CRM

Tesla Motors Inc. Nasdaq: TSLA

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