Morning Commentary: Vocera convertible bonds in focus following acquisition

By Abigail W. Adams

Portland, Me., Jan. 6 – After two days of active trading in the convertible bond market, secondary activity slowed as equity markets wavered between gains and losses.

The Dow Jones industrial average was down 169 points, or 0.44%, the S&P 500 index was up 0.02%, the Nasdaq Composite index was up 0.23% and the Russell 2000 index was up 0.39% shortly before 11 a.m. ET.

The overall convertibles secondary space remained weak with several issues in busted territory trading down from their lows since the start of the year.

“Outrights got smacked,” a source said.

However, Vocera Communications Inc.’s 0.5% convertible notes due 2026 were a bright spot on Thursday as the bonds skyrocketed alongside stock following an announced merger that would take the company private.

The 0.5% notes jumped 14 points with stock up more than 26%.

The 0.5% notes were changing hands around 143.875 early in the session.

However, the notes lagged on a dollar-neutral basis on the move up, a source said.

There appeared to be large outright sellers of the notes.

Vocera’s stock was changing hands at $79.11, an increase of 26.58%, shortly before 11 a.m. ET.

Stock jumped after Michigan-based medical technology company Stryker announced it was acquiring the company for an enterprise value of $3.09 billion.

Stryker will acquire all of Vocera’s outstanding stock of $79.25 per share. The deal is expected to close in the first quarter.

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