Prudential opens lower; Transocean stays active; Macrovision sinks on Gemstar-TV Guide deal

By Evan Weinberger

New York, Dec. 7 - Transocean Inc.'s new convertibles continued to be the standard bearer in the secondary market a day after they entered the market, although they came in a bit.

Amgen Inc. convertibles took a hit Friday on safety worries over its anemia drug.

Macrovision Corp. convertibles were hammered on its deal to purchase Gemstar-TV Guide International Inc.

Separately, ProLogis convertibles saw a bit of a rise Friday.

Prudential Financial, Inc. priced $3 billion in floating-rate convertible senior notes due Dec. 15, 2037 Friday. The Rule 144A transaction will carry a Libor minus 163 basis point coupon and a 35% initial conversion premium.

There is a $450 million over-allotment option.

Settlement is expected on Dec. 12.

The convertibles were offered at 99.25 and went down from there.

Along with a big down day for its convertibles, Macrovision announced plans for either convertibles or senior unsecured notes as part of the financing for its takeover of Gemstar.

If Macrovision is unable to launch, it has a $150 million bridge loan ready to go. Macrovision also secured a $650 million term loan to finance the deal.

Overall equity markets ended the day mixed following a middling job creation report and concerns about the Federal Reserve's stance on a rate cut when it meets Tuesday.

The Dow Jones Industrial Average picked up 5.69 points, or 0.04%, to close at 13,625.58.

The Nasdaq slipped 2.87 points, or 0.11%, to close at 2,706.16.

The Standard & Poor's 500 closed at 1,504.66, a slide of 2.68 points, or 0.18%.

Trading volume was relatively light in both equities and convertibles Friday. "Last I looked it was actually pretty low," one analyst said.

But the day wasn't a total washout. "Today, I would say it started out slow and it picked up later in the day," another analyst said.

Prudential deal opens low, ends lower

Despite coming in at a hefty $3 billion, Prudential's convertibles that were launched Thursday night and priced Friday morning created little to no buzz.

"It was a big deal for an overnight," one analyst said, adding that Prudential's poor volatility history didn't attract hedge players. "And it wasn't that attractive for outrights with the 35% premium."

Still others were critical of the deal itself, saying that it was more of a deal for the bookrunner - in this case Citigroup - to move up in the league tables than usual convertible financing.

"To me that's a league table arbitrage, not a real deal," a buyside fund manager said. He added that the deal was more like a corporate paper transaction than a convertibles deal.

The convertibles were reoffered at 99.25 in the morning. They closed at around 98.5 versus a closing stock price of $96.51.

Prudential stock (NYSE: PRU) lost $1.56, or 1.59%, on the day.

"I don't think it's going to be a big deal," another analyst said. "To the extent that it's trading today, a good part of whatever trading went on today was just bonds going home."

Prudential is a Newark, N.J.-based financial institution. Prudential plans to use the proceeds to repurchase $239 million in common stock and for general corporate purposes.

Transocean sails along

Houston-based oil and gas driller Transocean's $6 billion in convertible senior notes due Dec. 15, 2037 in three tranches, which hit the tape Thursday, has been a busy set of issues.

One analyst said the Transoceans may have been the most active opening of the year so far.

Another said that although volume had slowed, the three tranches of Transocean were the top three most active according to Trace Friday.

The convertibles didn't change price as much as they changed hands, though, and the first analyst said they came in a bit as the day drew to a close as investors tried to "lock in" profits.

The series A convertibles closed Friday at 105.25 to 105.5 versus a closing stock price of $135.07. They closed Thursday at around 106 versus a stock price of $134.10.

The series B convertibles closed Friday at 105.33 to 105.625 versus a stock price of $135.07. They also closed Thursday at around 106 versus a stock price of $134.10.

The series C convertibles closed Friday at 105 versus a stock price of $135.07. They closed Thursday at 106 versus a stock price of $134.10.

Transocean stock (NYSE: RIG) gained 97 cents, or 0.72%, in trading Friday.

Drug concerns drop Amgen

New worries cropped up for Thousand Oaks, Calif.-based drug maker Amgen Friday over its anemia drug Aranesp.

On Thursday night, Amgen announced it was working with the Food and Drug Administration over a new warning for the drug's label. Aranesp and others are meant to treat anemia in chemotherapy patients.

The FDA already hit the drug, and others in its class, with a "black box" label warning that high doses of the drug increased patients' risk of death and tumor growth.

Amgen announced that further studies showed more dangers from the drugs, and the new labeling will reflect them.

Amgen's 0.125% convertible senior notes due Feb. 1, 2011 closed Friday at 92.43 versus a closing stock price of $52.10. They closed Thursday at 94.21 versus a stock price of $55.15.

Amgen's 0.375% convertible senior notes due Feb. 1, 2013 closed Friday at 90.326 versus a stock price of $52.10 after finishing Thursday at 92.656 versus a stock price of $55.15.

Amgen stock (Nasdaq: AMGN) plunged $3.05, or 5.53%, on the day.

Macrovision sinks on new deal

Santa Clara, Calif.-based Macrovision announced a $2.8 billion deal to buy Los Angeles-based Gemstar-TV Guide.

Macrovision provides a platform for the distribution, security and enhancement of digital transmissions. Los Angeles-based Gemstar produces, among other things, TV Guide. The two companies said their merger would allow them to provide programming schedules and information through cable decoder boxes, computers and mobile phones.

The deal has proven to be a head scratcher to investors.

Macrovision is buying the larger company and taking on a large amount of debt to do so. The company announced plans for a $650 million term loan B and a contingent $150 million bridge loan from JPMorgan and Merrill Lynch. Macrovision will take on the bridge loan if it can't secure the $150 million through other debt instruments, including senior unsecured notes and convertibles.

Also, there were no plans mentioned for the print edition of TV Guide.

Macrovision stock (Nasdaq: MVSN) plunged $5.55, or 21.35%, to close at $20.44.

Macrovision's existing 2.625% convertible senior notes due Aug. 15, 2011 closed at 97.768 versus a stock price of $20.44. It had been at 115.687 versus a stock price of $25.99 on Thursday.

Gemstar stock (Nasdaq: GMST) didn't do much better. The stock dove 99 cents, or 16.56%, to $4.99 on Friday.

Macrovision's acquisition of Gemstar is expected to close in the second quarter of 2008.

The sale process started in June when News Corp., which owns 41% of Gemstar, pushed Gemstar to look for a buyer.

ProLogis moves up

Denver-based industrial real estate investment trust ProLogis watched its 1.875% convertible senior notes due Nov. 15, 2037 close Friday at 98.27 versus a closing stock price of $68.97. They closed Thursday at 97.73 versus a stock price of $69.24.

ProLogis stock (NYSE: PLD) fell 27 cents, or 0.39%, on Friday.

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