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Morning Commentary: Salix trades actively on sweetened Valeant deal; SanDisk, Tesla in action
By Rebecca Melvin
New York, March 16 – Salix Pharmaceuticals Ltd.’s convertibles were trading actively early Monday and were a little higher on the back of the sweetened takeout offer from Valeant Pharmaceuticals International Inc.
The Salix 1.5% convertibles due 2019 traded up about 7 points on an outright basis to 265, according to Trace data. Salix shares were up 2% to $172.75.
The new takeout price is $173.00 per share, or about $11.1 billion, which is up from Valeant’s original $158.00 per share offer. Meanwhile, Endo International plc withdrew its rival cash and stock offer, valued at $172.56 a share, after being eclipsed by Valeant’s new bid.
A convertibles trader had predicted on Friday that Valeant was going to increase its bid. “They are not going to let this slip. Endo still has to do due diligence to close this deal and its cash and stock. Valeant is paying cash and can close in a couple of weeks,” the trader said.
Salix was the most actively traded convertible bond in the early going on Monday, according to Trace data.
But SanDisk Corp. and Tesla Motors Inc. were also active, although they looked little changed price-wise on a dollar-neutral basis.
The SanDisk 0.5% convertibles due 2020 traded at 110.15, which was up 0.2 point. SanDisk shares turned lower by late morning after a few-cents gain for much of the early session.
Tesla’s 1.25% convertibles due 2021 traded at 83.5, which was up 0.7 point, according to Trace, with Tesla shares at $192.00, which was up nearly 2%.
Equities were higher. The Federal Reserve starts a two-day policy meeting on Tuesday. U.S. industrial production data came in early Monday a tad weaker than expected for a 0.1% increase in February over the prior month. Analysts expected industrial production to rise 0.2%.
Crude oil prices and Treasury yields were lower.
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