HeartWare surges on takeover news; convertibles lower in light volume; Brexit in focus

By Rebecca Melvin

New York, June 27 – HeartWare International Inc.’s two convertible bond issues surged to near par on Monday on news that Medtronic plc has agreed to buy the Framingham, Mass.-based medical device maker for $58.00 per share, or about $1.1 billion, representing a 93.5% premium to HeartWare’s closing share price on Friday.

Both HeartWare bonds, the longer-dated 1.75% convertibles due 2021 and the 3.5% convertibles due 2017, traded up to 99, a New York-based trader said, while HeartWare shares surged $27.81, or 93%, at $57.79.

Previously, the HeartWare 1.75% convertibles stood at 72, and the 3.5% convertibles were at 92.5 to 93.

The takeout news was a boost to the convertibles market, which was otherwise heavier in line with lower equities, albeit on light volume, as financial markets continued to reel in the aftermath of the United Kingdom’s vote to leave the European Union.

Volume was lacking so it was difficult to measure the market’s real reaction to the broader situation, a New York-based trader said.

“Everything is focused on macro and on instability, and everything is trading down,” a second trader said.

“There is not a lot of stability and the focus is on macro; everyone is trying to work through that,” the trader said.

As for the health-care sector, the trader said that it may be one sector that is somewhat immune to economic concerns related to a U.K. exit from the E.U.

© 2015 Prospect News.
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