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Schering-Plough prices $2.5 billion convertibles at 6%, up 22.5%
New York, Aug. 9 - Schering-Plough Corp. priced $2.5 billion of mandatory convertible preferred stock with a 6% dividend and a 22.5% initial conversion premium after the close Thursday.
The securities are convertible into between 74.206 and 90.909 million shares, for an upper conversion price of approximately $33.69.
The deal came with a dividend at the cheap end of talk, which put it at 5.5% to 6%, and at the middle of the conversion premium talk of 20% to 25%.
Goldman, Sachs & Co. is the global coordinator of the registered transaction. Banc of America Securities, Bear, Stearns & Co., Citigroup and Morgan Stanley are the bookrunners.
BNP Paribas, Credit Suisse Securities (USA) LLC and JPMorgan are co-lead managers. The co-managers are Daiwa Securities America, Santander Investment, Utendahl Capital Partners and The Williams Capital Group.
Schering-Plough also priced 50 million common shares at $27.50 each.
The convertibles consist of 10,000 shares with a liquidation preference of $250 per share. There is a 1.5 million share or $375 million over-allotment option on the mandatories and a 7.5 million share over-allotment option on the common stock offering.
There is a provisional conversion feature allowing Schering-Plough to force conversion subject to a 150% hurdle. There are dividend make-whole, takeover protection and anti-dilution agreements built in.
The convertibles will be listed on the New York Stock Exchange under the symbol "SGP PrB."
Schering-Plough is a Kenilworth, N.J.-based pharmaceuticals firm.
The company plans to use the proceeds of its offering to partially fund its acquisition of Organon BioSciences NV. The acquisition was announced March 12 and is scheduled to close by the end of 2007. If that deal is canceled, the proceeds will be used for general corporate purposes.
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