Dynegy’s new 7% tangible units fly higher; BioMarin paper trends up on Sanofi takeover rumors

By Stephanie N. Rotondo

Seattle, June 17 – Dynegy Inc.’s new $400 million of 7% tangible equity units were “flying” in early Friday trading, according to a trader.

He said the units – which came in line with the 6.625% to 7.125%, up 22.5% to 27.5% price talk on Thursday – were trading in a 106 to 107 range. As for the stock underlying the units, it was “up about a dollar,” he said.

Dynegy plans to use proceeds from the new issue to fund an acquisition.

Meanwhile, BioMarin Pharmaceutical Inc.’s equity was also ticking higher, leading the 1.5% convertible notes due 2020 into higher territory as well.

“They are up on rumored Sanofi interest,” a trader said, noting a Bloomberg report that indicated Sanofi was eyeing BioMarin as a takeover alternative to Medivation.

Dynegy does well

Dynegy’s new 7% tangible equity units fared well on Friday, just one day after the company priced the $400 million deal.

Early in the session, the units were seen in a 106 to 107 range. Shortly before the bell, a trader said the units had come in a touch, though they were still higher on the day.

He placed them in a 105.25 to 106 context, versus a stock price of $16.95.

The equity ultimately closed at $16.92, up 89 cents, or 5.55%.

Morgan Stanley & Co. LLC, RBC Capital Markets LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., MUFG, BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc. and SunTrust Robinson Humphrey Inc. were the joint bookrunners for the registered deal.

There is a greenshoe for an additional $60 million units.

The units hold a prepaid stock purchase contract and a senior amortizing note. At the maturity date of July 1, 2019 holders will receive between 5.0201 and 6.1996 shares of common stock per purchase contract.

Proceeds will be used to fund a previously announced acquisition of ownership interests in certain North American power generation assets from International Power, SA, an indirect subsidiary of Engie SA, and to pay related fees and expenses.

Dynegy plans to list the units on the New York Stock Exchange under the symbol “DYNC.”

Houston-based Dynegy is a producer and marketer of electric energy.

BioMarin bounces

BioMarin Pharmaceuticals’ 1.5% convertible notes due 2020 gained ground Friday as rumors of a possible takeover bid swirled.

The bonds were trading at “119 and change, 120,” a trader said early in the day. At that point, the equity was up over $2.00 a share.

However, the trader pointed out that the stock had traded as high as $85 earlier in the session.

“So it’s already coming in,” he said. “Nobody believes the rumors.”

By the end of the day, the notes were seen trading with a 119 handle, which was up 2 points.

The stock closed up $3.06, or 3.79%, at $83.86.

Bloomberg reported the rumor that Sanofi was considering dropping its $9.3 billion bid for Medivation early in the session, citing a post on Betaville, a financial blog run by Ben Harrington. Harrington is the former M&A and markets editor from The Daily Telegraph.

“Top sources have told me the French pharmaceutical giant has begun looking at U.S.-based rare disease specialist BioMarin Pharmaceutical as a potential alternative takeover deal after growing frustrated in its pursuit of Medivation, which has so far resisted the French company’s advances,” Harrington wrote in his post.

Analysts have since responded to the rumors, deeming them just chatter. Some have even speculated that Sanofi itself started the buzz in an effort to knock down Medivation’s share price.

Mentioned in this article:

Dynegy Inc. NYSE: DYN

BioMarin Pharmaceutical Inc. Nasdaq: BMRN

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