Petsmart sees several-point intraday swing post-acquisition; Avaya quiets after Monday uptick; pharma drops

By Colin Hanner

Chicago, April 18 – An acquisition brought on the most heavily-traded volume of the session for Petsmart Inc., traders said, after the company acquired online pet food and product retailer Chewy, Inc.

The brick-and-mortar retailer purchased Chewy for $3.35 billion, according to Recode, which cited several sources close to the deal. The price tag made it the largest e-commerce acquisition ever.

Petsmart bonds shot up in early morning trading, a trader said, before paring some gains in the afternoon to remain in the net positive for the session.

Santa Clara, Calif.-based Avaya Inc. was lower and quieter following Monday’s session that brought a several-point uptick to bonds that were boosted by news of a reorganization filing.

St. Louis-based consumer packaged goods company, Post Holdings, Inc., announced acquired Weetabix Food Co. for £1.4 billion, according to a news release.

Though Post’s stock and rating were downgraded on the day, its bond were up marginally, a trader said.

In what would affect other pharmaceutical companies on the day, Cardinal Health, Inc. announced it was lowering expectations for its guidance range because of anticipated fourth-quarter results due to falling drug prices, a news release said.

Valeant Pharmaceuticals International, Inc. and Concordia International Corp. posted losses on the day.

Petsmart jumps

Petsmart’s 7 1/8% notes due 2023 finished the day in a 94 to 94¼ zip code, traders said, a 1½-point gain on the session. A trader said it had traded as high as 97 before coming back down.

“It traded up immediately in the day” when the deal to acquire Chewy was announced, a trader said, though details, including the price of the deal, were not disclosed until the afternoon.

“There was not a lot of details on that acquisition,” a trader said. “It was kind of hard to figure out what exactly the deal is going to look like, but certainly created a lot of activity in that one today.”

The acquisition is expected to close by the end of PetSmart’s second fiscal quarter of 2017, a news release said.

Avaya quiets after busy Monday

“Avaya was quieter” on Tuesday, a trader said, following the business collaboration and communication service company’s upward movement on Monday caused by the company filing its reorganization plan.

The 7% notes due 2019 were down ½ point to 81, while the 10½% notes due 2021 were down ½ point to 13, a trader said.

Posting higher

Cereal maker Post Holdings’ 5¾% notes due 2027 were up ½ point to 101, a trader said.

The billion-dollar euro acquisition caused Post’s stock to plummet $3.35, or 3.81%, to $84.51.

Post said in a press release that it expects to fund the acquisition of Weetabix with a combination of cash on hand, borrowings under its existing revolving credit facility and possibly a new senior secured term loan facility.

Pharma, hospitals lower

Largely seen as bringing down the pharmaceutical sector was Cardinal Health’s lowered expectations for the quarter, and Valeant Pharmaceuticals seemed to take the brunt.

Its 6 1/8% notes due 2025 were down ¾ point to 73, while the 7% notes due 2021 were down ½ point to 83 3/8, a trader said.

The 5 3/8% notes due 2020 were down 1 point to 85 1/8.

Concordia International’s 9% notes due 2022 were down ¾ point to 69½.

Similar to the Cardinal Health-contagion for pharmaceuticals, HCA Holdings Inc.’s forecast of its first quarter earnings on Monday may have weighed down on its 5¼% notes due 2025 on Tuesday, which were down 3/8 point to 106 5/8, a trader said.

Tenet Healthcare Corp.’s 6¾% notes due 2023 were down 1 point to 95¼.

Hertz heads down

“Hertz bonds were active,” a trader said on Tuesday. “[There was] not a lot of price movement, and it looked like it was a smidge weaker.”

The 5 7/8% notes due 2020 were down ¾ point to 92 7/8.

And its 6¾% notes due 2019 were down ¼ point to 98¼, “rebounding off lower trades” earlier in the session, a trader said.

Distressed round-up

Energy and gas names were down on the session, traders said, led by California Resources Corp.’s 8% notes due 2022, which were “definitely weaker.” They traded down ¾ point to 79.

Offshore driller Noble Holding International Ltd.’s 7¾% notes due 2024 were down 1¼ point to 95.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 were down 5/8 point to 84¼.

Devika Patel contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.