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Morning Commentary: SanDisk adds outright on takeout news; Proofpoint, Citrix eyed amid earnings
By Rebecca Melvin
New York, Oct. 21 – SanDisk Corp.’s convertibles, which have been a focus of trade for almost two weeks, were in the crosshairs again Wednesday after news that the company is being acquired by Western Digital Corp. for about $19 billion in cash and stock, or $86.50 per share, representing a premium of about 15% to SanDisk’s closing share price on Tuesday.
The deal was widely anticipated. Western Digital will pay $85.10 per share in cash and 0.0176 of a share of Western Digital common stock per share of SanDisk stock, and if the Unisplendour transaction has not closed or is terminated, $67.50 in cash and 0.2387 of a share of Western Digital stock per SanDisk share, according to the companies’ release.
SanDisk also reported third-quarter results that topped estimates.
SanDisk’s 0.5% convertibles added about a point outright to 107ish, with shares of the Milpitas, Calif.-based chip storage company up about 4% to $78.12.
The SanDisk 1.5% convertibles were back up over the 160 mark from 156.5 last on Tuesday, according to Trace data.
Further consolidation in the chip space is anticipated, and convertibles in focus include Micron Technology Inc. Most of Micron’s convertible issues gained more than 10% outright on Tuesday.
Convertibles players were also sizing up potentially vol.-producing earnings reports early Wednesday.
Proofpoint Inc. was expected to report after the market close, as was Citrix Systems Inc.
Proofpoint has a 0.75% convertible due 2020, of which $200 million priced in June. It also has an older 1.25% convertible due 2018, which trades sporadically. On Tuesday, it changed hands at 154.125.
Citirix has a 0.5% convertible due 2019 that traded actively on Tuesday at 108 to 109, according to Trace data.
Shares of Proofpoint, the Sunnyvale, Calif.-based internet security-service company, and Citrix, the Fort Lauderdale, Fla.-based cloud computing company, were both down about 2.5% in the early going.
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