SanDisk lower on swap after takeout news; Micron lower outright; Horizon slumps on swap

By Rebecca Melvin

New York, Oct. 21 – SanDisk Corp.’s convertibles, which have been a focus of trade for more than a week, were in the crosshairs again on Wednesday after news that the company is being acquired by Western Digital Corp. for $19 billion in cash and stock, or $86.50 per share, representing a premium of about 15% to SanDisk’s closing share price on Tuesday.

The news was expected, and the SanDisk convertibles, which were mostly mixed in previous sessions, were both lower by a point on swap, a New York-based trader said.

Lam Research Corp.’s 2.625% convertible issues were also trading actively, but better, after news that the Fremont, Calif.-based semiconductor-equipment company has agreed to buy KLA-Tencor Corp. for $10.6 billion. The Lam bonds traded up 0.75 point on swap on the news, a New York-based convertibles analyst said.

Lam shares ended up 76 cents, or 1%, at $70.79.

Further consolidation in the chip space is anticipated, and convertibles in focus also included Micron Technology Inc.

Micron’s 3% convertibles were lower by about 2 points intraday but were holding in OK on a swap basis, a trader said.

Horizon Pharma plc’s 2.25% convertibles were “swinging all over the place,” but ultimately ended down a point or two points on swap, traders said. Horizon shares also fell but recovered some ground by the close after Valeant Pharmaceuticals International Inc. refuted allegations about business practices associated with its specialty pharmacies.

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