Incyte greenshoe lifts two-part convertibles deal to $750 million

By Susanna Moon

Chicago, Nov. 14 - Incyte Corp. said underwriters fully exercised the $25 million over-allotment option on each of the series of convertible senior notes, bringing the total deal size to $750 million.

Incyte priced $350 million of 0.375% notes due 2018 and $350 million of 1.25% notes due 2020 on Nov. 7, as previously reported by Prospect News.

Affiliates of Julian C. Baker, a director of the company, purchased $500 million principal amount of the notes in the offering, consisting of $250 million principal amount of 0.375% notes and $250 million principal amount of 1.25% notes, according to a company press release.

Some of the proceeds were used to repurchase $117.3 million of outstanding 4.75% convertible senior notes due 2015 held by affiliates of Baker, in privately negotiated transactions, for an aggregate purchase price, including accrued interest, of about $500 million. The rest of the proceeds will be used for research and development, and for other general corporate purposes.

Both Rule 144A tranches had a $25 million greenshoe and were sold through Goldman Sachs & Co., J.P. Morgan Securities LLC and BofA Merrill Lynch as the joint bookrunning managers.

Interest on both issues will be payable semiannually, and neither issue can be redeemed prior to maturity.

The initial conversion rate per each $1,000 of notes is 19.3207 shares of common stock, representing an initial conversion price of $51.76 per share, or an about 40% premium over the closing share price of $36.97 on Nov. 7.

Both tranches priced richer than talk: the five-year tranche was seen pricing with a 0.625% to 1.125% coupon and a 35% to 40% initial conversion premium while the seven-year tranche was seen pricing with a 1.5% to 2% coupon and also a 35% to 40% initial conversion premium.

Wilmington, Del.-based Incyte is a biopharmaceutical company.

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