SanDisk mostly better as market weighs deal; Priceline lower outright; FOMC statement eyed

By Rebecca Melvin

New York, Jan. 27 – SanDisk Corp.’s convertibles were active and traded mostly better on Wednesday as market players continued to weigh the odds that the tie up with Western Digital Corp. will occur as planned.

The Western Digital-SanDisk deal was unveiled in October for $19 billion in cash and stock, or $86.50 per share, which represented a premium of about 15% over SanDisk’s share price at the time. On Wednesday, SanDisk shares closed at $64.21.

Also on Wednesday, Citigroup Global Markets Inc. initiated coverage with a “buy” rating on the Milpitas, Calif.-based flash memory chip maker’s shares, and after the market close, SanDisk reported fourth-quarter earnings that were better than expected.

The SanDisk 1.5% convertibles “have been one of the best performing bonds this year as both outrights and hedgies play the deal/deal break,” a New York-based trader said.

Elsewhere, Priceline Group Inc.’s convertibles were trading lower in active trade after a stock downgrade by Goldman Sachs & Co.

Overall, U.S. convertibles were trading lightly in early trade as market players eyed various earnings reports due out and word from the Federal Open Market Committee expected at the conclusion of its two-day meeting Wednesday afternoon.

The Fed didn’t make any changes in rates at this meeting, as expected, and pointed to renewed turbulence in global financial markets as something that it is watching carefully, but it didn’t indicate that an interest-rate rise was not on the table for March.

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