Depomed on radar in wake of patent suit win; NXP still active; NQ Mobile settles placement

By Stephanie N. Rotondo

Seattle, Oct. 4 – It was “all the same names” trading in the convertible bond market on Tuesday, according to one trader.

The trader also noted that the Rosh Hashana holiday continued to weigh on overall volume, though liquidity was moderately better than Monday.

Depomed Inc. continued to be actively traded. After gaining ground in the previous session, the 2.5% convertible senior notes due 2021 were holding steady at 145.25 against a stock price of $25.37, a trader reported at mid-morning.

The issue ended about a point better in a 145.5 to 146.5 range, though the equity declined 22 cents to $25.36.

The name was getting attention on Monday after it was reported Friday that the drugmaker had won a patent lawsuit on its opioid drug Nucynta. The win could help the company seek a buyer.

There also continued to be some action in NXP Semiconductors NV’s 1% convertible senior notes due 2019.

A trader pegged the issue at 120.125 versus a share price of $103.88 at mid-morning. At the close, the convertible bonds were still trading with a 120 handle, which compared to trades with a 119 handle on Monday.

The stock also improved, rising 47 cents to $103.23.

On Thursday, it was announced that Qualcomm Inc. was in talks to acquire the Eindhoven, Netherlands-based chipmaker in a deal valued at over $30 billion.

But the deal has not yet been formalized and Nomura analyst Romit Shaw speculated in a research note that Texas Instruments could also throw its hat in the ring.

“Most investors expect Qualcomm to win the process,” Shaw wrote. “While we don’t disagree, we also see Texas Instruments as a dark horse that hasn't been seriously thought of and could rush past the field in triumph.”

For its part, TI hasn’t made an acquisition in the last five years, Shaw noted, but in the 20 years prior to that, it had made 33 asset purchases.

Shaw also pointed out that NXP’s chief executive officer and chairman – Rick Clemmer and Peter Bonfield, respectively – used to work at TI and have maintained ties with the firm’s management team.

Meanwhile, NQ Mobile Inc. said it has closed its $220 million Regulation S offering of 8% convertible notes due 2018.

That issue was sold in its entirety to Zhongzhi Hi-Tech Overseas Investment Ltd.

The deal priced Sept. 27 with a 51.5% initial conversion premium.

Proceeds from the deal are expected to be used to pay off the existing 4% convertible senior notes due 2018. That paper becomes putable on Oct. 15, then provisionally callable on Oct. 20, with a 130% price hurdle.

A trader said the 4% convertibles had a 98.75 bid in early Tuesday trading.

The stock was trading at $3.85 early in the session. That was a significant discount to the conversion price of $25.61.

Mentioned in this article:

Depomed Inc. Nasdaq: DEPO

NQ Mobile Inc. NYSE: NQ

NXP Semiconductors NV Nasdaq: NXPI

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