Spectranetics flies higher on takeover news; Microchip busy, but steady; EZCorp on deck

By Stephanie N. Rotondo

Seattle, June 28 – Spectranetics Corp. was the nom du jour on Wednesday in response to news that the medical device maker will be acquired by Philips NV.

The announcement resulted in an about 18-point jump for the company’s convertibles, which followed an over 26% gain in the underlying equity.

Meanwhile, Microchip Technology Inc.’s were on the active side, though “for no particular reason,” a trader remarked.

The trader also said that the “bonds and stock are essentially in line.”

The 1.625% convertible notes due 2027 closed the session around 107.5, which was up from the day’s low but about unchanged day over day, according to one sellside source. The 2.25% convertible notes due 2037 were pegged at 106.5 bid, 106.75 offered, off slightly to unchanged.

The company’s equity was up $1.12, or 1.42%, at $79.83.

In the primary, the market was waiting for EZCorp Inc. to price its previously announced Rule 144A offering of seven-year convertible senior notes.

As of 6 p.m. ET, details on the new issue were not available.

Price talk is for a 1.875% to 2.375% yield and an initial conversion premium of 20% to 25%, according to a market source.

UBS Securities LLC and Jefferies LLC are running the books.

Ahead of pricing, the company’s stock dipped $1.40, or 15.38%, to $7.70.

Proceeds will be used to repay borrowings under a senior secured credit facility and for general corporate purposes. The company may also use the funds to retire a portion of its outstanding 2.125% cash convertible senior notes due 2019 and for potential acquisitions.

The 2.125% convertibles held their ground in Wednesday trading, with a source seeing the notes at 97 bid, 98 offered.

Spectacular Spectranetics

Spectranetics’ 2.625% convertible notes due 2034 were boosted in midweek trading as the market reacted positively to the company being taken over by Philips.

One market source called the issue up over 18 points, trading in a 135.25 area. Another source saw the convertibles in a 135 to 135.5 range, which compared to levels around 118.25 on Monday.

The company’s stock was also on a tear, jumping up $7.95, or 26.15%, to $38.35.

Philips, which has been moving towards becoming a healthcare focused company of late, will pay $2.16 billion, or $38.50 a share, for Spectranetics. That amounted to a 27% premium over Tuesday’s closing share price.

Spectranetics specializes in devices used to treat heart disease. The acquisition will improve Philips’ position in the vascular realm, given its early 2015 purchase of Volcano, a vascular imaging company.

Mentioned in this article:

EZCorp Inc. Nasdaq: EZPW

Microchip Technology Inc. Nasdaq: MCHP

Spectranetics Corp. Nasdaq: SPNC

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