New convertibles from Patrick, Nutanix remain strong; Acorda, NXP, Blackhawk active

By Abigail W. Adams

Portland, Me., Jan. 19 – New convertibles from Nutanix Inc. and Patrick Industries Inc. continued to perform well on their second full trading day on the market, according to market sources. The deals, totaling $650 million, were welcome in a contracted convertible space.

“It’s been a good start to the year,” a market source said.

While new paper attracted attention, three existing issuances saw a resurgence of interest in response to buyout news.

Acorda Therapeutics Inc.’s 1.75% convertible notes due 2021 were active and made nominal gains on an outright basis amid rumors of a potential buyout from Biogen Inc.

The Ardsley, N.Y.-based biotechnology company has long been the subject of potential takeover rumors, but “the speculation is heating up,” a market source said.

While there was little fluctuation in price, Blackhawk Network Holdings Inc.’s 1.5% convertible notes due 2022 and NXP Semiconductors NV’s 1% convertible notes due 2019 have also undergone a flurry of trading activity on buyout news.

Day two

Nutanix’s recently priced 0% convertible notes due 2023 were up a point on a dollar-neutral basis early in Friday’s session, although trading of the notes slowed, a market source said.

The notes firmed around 102 on an outright basis. Nutanix stock was down to $35.93 at the market close Friday, a decrease of 0.73%.

There was heavy demand for Nutanix during the bookbuilding process, but trading activity of the notes paled in comparison to Patrick Industries’ 1% convertible notes due 2023, which also debuted on Thursday.

Patrick Industries’ 1% notes maintained a 0.5 point expansion on a dollar-neutral basis in early trading on Friday.

The deal, which priced within talk after the market close on Wednesday, was marketed to outright buyers, a market source said.

When the stock moved up on Thursday, “some guys were flipping” the notes, a market source said. The rise in Patrick Industries’ stock was attributed to stock buying from the call spread.

The 1% notes ended Thursday weaker but were up again on Friday. The notes were trading at 103.5 versus an equity price of $68.00. Patrick Industries stock ended the day at $69.60, an increase of 2.35%.

Speculation on Acorda

Acorda’s 1.75% notes gained about 2 points to trade around 96 early Friday after solidifying around 94 in active trading on Thursday.

The notes traded to a high of 96.481 and a low of 93.375 but ended the session Friday at 96.12, according to Trace data. Acorda stock ended the day at $27.20, an increase of 8.8%.

The company’s 1.75% notes and stock have been active amid various media reports that have surfaced recently about a prospective takeover bid by Biogen and Asian pharmaceutical companies.

However, nothing is definitive yet, a market source said. “It’s all just speculation at this point,” the source said.

The fate of the convertible notes will largely depend on the takeout price when and if the acquisition occurs.

“If you’re hedge you have to watch your delta,” the source said.

Blackhawk, NXP active

Blackhawk’s 1.5% notes due 2022 remained active on Friday after the company announced Monday it would be acquired by private equity firm Silver Lake and investment fund P2 Capital.

After gaining 6 points on an outright basis on Monday, the notes solidified around 111, which is where they stayed during trading activity on Friday. Blackhawk stock ended Friday’s session at $45.25, an increase of 0.22%.

Silver Lake and P2 Capital plan to take the Pleasanton, Calif.-based prepaid gift card and payment services company private and are offering $45.25 per share to be settled in cash.

The deal is expected to close mid-2018.

NXP Semiconductor’s 1% notes also saw a flurry of trading activity after Qualcomm secured E.U. antitrust regulators’ approval for its takeover bid of the company. The notes gained about 1 point on an outright basis to solidify at 126 on Friday.

NXP stock was up slightly, closing Friday at $120.45, an increase of 0.38%.

Qualcomm’s $47 billion takeover bid for the Eindhoven, Netherlands-based global semiconductor manufacturer at $110.00 a share has been rejected by shareholders as undervaluing the company.

The takeover bid still needs China’s approval.

As Qualcomm moves forward with its long-planned acquisition of NXP, it is still fending off a hostile $130 billion takeover bid by Broadcom for $70.00 a share, which Qualcomm has said dramatically undervalues the company.

Broadcom’s $130 billion takeover bid includes $25 billion in net debt, which factored in Qualcomm’s acquisition of NXP.

Mentioned in this article:

Acorda Therapeutics Inc. Nasdaq: ACOR

Blackhawk Network Holdings Inc. Nasdaq: HAWK

Nutanix Inc. Nasdaq: NTNX

NXP Semiconductors NV Nasdaq: NXPI

Patrick Industries Inc. Nasdaq: PATK

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