Theravance deal comes upsized; NetSuite drifts down on Oracle speculation; NXP in focus

By Stephanie N. Rotondo

Seattle, Oct. 28 – The convertible bond market was as subdued as it has been all week in Friday dealings. However, topical names were moving around.

For instance, Theravance Biopharma Inc.’s $200 million of 3.25% convertible senior notes due 2023 – a deal priced overnight – were on the active side, trading around par, according to a market source.

The deal came with a 32.5% initial conversion premium, which was at the rich end of the 27.5% to 32.5% price talk. The coupon was talked in a 3% to 3.5% range.

The deal was upsized from $150 million.

In addition to the convertibles sale, the Dublin-based biopharmaceutical company also sold $100.1 million of ordinary shares.

In response, the company’s stock traded off, falling $1.13, or 4.26%, to $25.42.

Leerink Partners, Evercore ISI and Piper Jaffray & Co. ran the books. Guggenheim Securities LLC was a lead manager.

The convertibles sale will include a $30 million over-allotment option. The share offering will have a $15,015,000 greenshoe.

The initial conversion rate is 29.0276 shares per each $1,000 of notes. That equates to an initial conversion price of $34.45 a share.

Proceeds will be used for general corporate purposes, which may include research activities, preclinical and clinical development of product candidates, manufacturing, selling and marketing expenses, capital expenditures, working capital and acquisitions.

Also active was NetSuite Inc.’s 0.25% convertible notes due 2018. The bonds, as well as the equity, were trading off as investors speculate on whether or not a takeover bid made by Larry Ellison’s Oracle Corp. will be accepted or not.

NXP Semiconductors NV meantime remained in focus following Thursday’s news that Qualcomm Inc. had made a $39 billion bid for the chipmaker.

NetSuite active on Oracle bid

NetSuite’s 0.25% convertible notes were slightly weaker to unchanged, albeit in active trading, after it was reported that Oracle’s $109.00 a share bid was the company’s “best and final offer.”

The convertibles were seen straddling 105 against a share price of $93.67 at mid-morning. At the close, a market source quoted the issue at 105 bid, 105.5 offered.

The stock underlying the debt, however, rose 65 cents to $95.02.

Oracle, helmed by Larry Ellison, made the offer back in July. But thus far, NetSuite investors have held out, hoping for more. Those hopes were dashed Wednesday when Mark Hurd, co-chief executive officer of Oracle, told CNBC that the bid – which would be valued at a total of $9.3 billion – was the “best and final offer.”

NXP stays busy

NXP Semiconductor’s 1% convertible notes due 2019 continued to be active on Friday – though not as active as they were on Thursday – in the wake of Qualcomm’s $39 billion bid for the Eindhoven, Netherlands-based chip maker.

The convertibles were slightly better in early trading, at 114.875. But another source called the issue unchanged at 114.5 bid, 115 offered.

The equity, after gaining ground on Thursday, gave up some ground come Friday. The stock fell 70 cents to $99.78.

The takeover deal places NXP’s stock value at $110.00.

On a per-share basis, the deal is valued at $39 billion, making it the second-largest semiconductor deal on record. Including the assumption of debt, the deal is valued at $47 billion.

NXP also reported earnings on Wednesday, showing a third-quarter profit of $91 million, or 26 cents per share.

That was lower than the $361 million profit seen the year before.

Operating income, however, rose to $691 million from $449 million.

Revenue was also improved, jumping 62% to $2.47 billion.

The merger – which is still subject to regulatory approval – is expected to close at the end of 2017.

Mentioned in this article:

NetSuite Inc. NYSE: N

NXP Semiconductors NV Nasdaq: NXPI

Theravance Biopharma Inc. Nasdaq: TBPH

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