AMAG convertibles skyrocket on buyout; j2 Global active; SolarEdge gains outright

By Abigail W. Adams

Portland, Me., Oct. 1 – Despite a lack of new paper, the convertibles secondary space saw an uptick of trading activity on Thursday with company news pushing outstanding issues into the spotlight.

AMAG Pharmaceuticals Inc.’s 3.25% convertible notes due 2022 were “the big winners of the day,” a market source said.

The notes skyrocketed first on rumors about and then on confirmation of its pending acquisition.

j2 Global Inc.’s 1.75% convertible notes due 2026 were also active and improved following news the company plans to price a high-yield bond.

SolarEdge Technologies Inc.’s 0% convertible notes due 2025 continued to rocket higher on an outright basis as stock continued its upward momentum.

AMAG’s buyout

AMAG Pharmaceuticals’ 3.25% convertible notes dominated the tape with the notes skyrocketing first on rumors and then on confirmation of a pending buyout.

The 3.25% convertible notes were up more than 7 points outright to 97.125 early in the session.

Following confirmation that AMAG would be acquired, the notes jumped to a 99-handle.

They were changing hands at 99.375 in the late afternoon, according to a market source.

AMAG’s stock traded to a high of $13.80 and a low of $12.55 before leveling off at $13.65 following details of the buyout.

Thursday’s closing price was an increase of 45.21%.

While stock skyrocketed on Thursday, the long-busted convertible notes were making gains based on their takeout price.

The 3.25% notes become putable at par if the acquisition is completed.

If the acquisition is completed by January, holders are looking at a 6.5% return.

“It’s not bad considering what’s out there,” a source said.

With the convertible market as strong as it has been, few names in the universe were offering much yield.

AMAG’s stock and convertible notes skyrocketed early in the session on rumors that Apollo Global Management’s Covis Group Sarl was eyeing the company for a potential takeover.

The companies confirmed those rumors around 11:30 a.m. ET.

Covis will buy AMAG for $647 million on an enterprise basis, which includes debt.

It is offering shareholders $13.75 per share in cash, which equals $498 million, according to a company press release.

A majority of AMAG’s outstanding shares must be tendered in order for the acquisition to be completed.

However, there is always the possibility the acquisition may fall apart, a source said.

j2 active

j2 Global’s 1.75% convertible notes due 2026 were active on Thursday following news the company plans to price a high-yield bond.

The 1.75% notes gained 2 points outright to trade up to 91.125.

They were improved about 0.5 point dollar-neutral, a market source said.

j2 Global’s stock traded to a high of $70.99 and a low of $69.06 before closing the day at $70.18, an increase of 1.39%.

While one source saw holders selling the convertible notes to participate in the junk bond offering, another felt there was more buying activity in the convertible notes.

The convertible notes have a shorter maturity than the proposed junk bond, a source said.

j2 Global plans to price $1.2 billion of 10-year senior notes (existing Ba3/BB) on Friday with early guidance for a yield in the 4½% to 4¾% area, Prospect News reported.

SolarEdge’s new high

SolarEdge’s 0% convertible notes due 2025 continued to rocket higher on an outright basis as stock again set a new 52-week high.

The 0% convertible notes jumped another 2 points outright to trade up to a 117-handle, a market source said.

However, the notes were moving in line dollar-neutral.

They were holding their premium as the notes gaped higher with stock, a source said.

SolarEdge’s stock traded to a new 52-week high of $249.73 and a low of $235.22 before closing the day at $248.87, an increase of 4.41%.

Stock has continued to break out since setting a new 52-week high on Monday with a new high reached each day of the week.

The solar power technology company priced a $550 million issue of the 0% convertible notes on Sept. 22 with the greenshoe later exercised in full, lifting the total size of the deal to $632.5 million.

Mentioned in this article:

AMAG Pharmaceuticals Inc. Nasdaq: AMAG

j2 Global Inc. Nasdaq: JCOM

SolarEdge Technologies Inc. Nasdaq: SEDG

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