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Morning Commentary: HeartWare surges on takeover news; convertibles mostly lower on light volume
By Rebecca Melvin
New York, June 27 – HeartWare International Inc.’s convertibles and shares surged 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.
The HeartWare convertibles surged to about 99, a New York-based trader said. Last month, HeartWare’s 1.75% convertibles due 2021 were indicated in the mid 60s and the HeartWare 3.5% convertibles were in the low 90s. HeartWare shares were up $37.55, or 92%, at $57.53 at late morning.
Elsewhere, the convertible bond market was heavier with equities, albeit on light volume, as financial markets continue to reel in the aftermath of the United Kingdom’s vote to leave the European Union.
But volume is needed to be able to measure a real reaction to the broader situation, and volume is lacking, a New York-based trader said.
Red Hat Inc.’s 0.25% convertible notes due 2019 extended losses early Monday after trading lower and actively on Friday. The bond changed hands below 120 early Monday after dropping more than a point to 123 on Friday. Shares of the Raleigh, N.C.-based software company were down $2.64, or 3.6%, to $70.98 in the early going.
On Friday the Red Hat convertibles were called 123.25 versus a stock price of $75.25.
Also trading notably lower was Priceline Group Inc.’s convertibles. The Priceline 0.9% convertible due 2021 traded just below par, at 99.675 and 99.8, which was down from 101 to 102 on Friday, according to Trace data. Shares of the Norwalk, Conn.-based online travel services company were down $58.00, or 4.7%, at $1,170.35.
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