Millipore higher on potential takeout reports; Seagate steady; Trico Marine heads still lower

By Rebecca Melvin

New York, Feb. 22 - Convertibles players eyed carefully Millipore Corp. on Monday, and there were some trades in the name at higher levels after reports that laboratory equipment maker Thermo Fisher Scientific Inc. has offered to buy the biotechnology drug-making equipment maker for $6 billion.

Thermo Fisher and Millipore declined to comment on reports of the bid.

Traders viewed the potential link up as interesting and said that while the Millipore bonds weren't overly active, many were evaluating the paper.

"Hopefully it will get interesting," said one New York-based sellside trader, while another sellsider said: "It was probably the most interesting name of the day."

Seagate Technology's old Maxtor convertibles were quieter but still trading on Monday after being a top mover and moving a little higher in recent sessions. Seagate's underlying shares were up nearly 10% last week.

Trico Marine Services Inc.'s convertibles also quieted on Monday from previous sessions but were seen down about 0.5 point in tandem with lower stocks. But "not much was printing," a New York-based sellside trader said.

Overall volume was weak and not much paper was trading.

"There was not a ton of volume, and I was doing mostly equity stuff today, the convert stuff a little bit," a sellsider said.

Another sellsider called volume "absurdly weak and said that he had never seen the convert space this slow.

"I haven't been doing it that long but we had about $195 million [Trace volume], and I remember in 2007, I would see days of volume of $2 billion of shares trade. But you walk around our floor and everyone is slow," the sellsider said.

Europe also slow

European convertible markets remained quiet on Monday as rich valuations and a lack of new issues continue to dampen investor interest, a Zurich-based trader said.

"I would say the last two weeks have maybe been the quietest in the last two to three years," the trader said. "In Europe it's really quiet. There's a little bit more going on in Asia and with Asian convertibles, but also there it's quite quiet."

Potential buyers are waiting for the market to cheapen before making their moves, while more activity in the primary market could also provide a boost.

"There are no real new issues and the market's not so cheap anymore, and investors are staying on the sidelines and maybe waiting for a correction and not trading too much," the trader said. "I think the investors are positioned and may be waiting for new opportunities, maybe waiting for a correction or something and also waiting for new issues."

Millipore gains on possible acquisition bid

Millipore's 3.75% convertibles due 2026 traded at 110.75, with a high print for the day at 111.75, which compared to last week when the paper stood at about 102 and was barely trading, a New York-based sellside trader said.

Another sellsider said the bonds were 109.5 bid, 110.5 offered versus a share price of $86.00, but the underlying stock gyrated, causing traders to hang on the sidelines.

On Feb. 12, the Millipore bonds traded at 101.5 versus a share price of $68.62, which was a 2.88% yield to put with 22 months of life remaining for the paper.

"The stock is moving all over the place. Initially they came out with news that there was a $6 billion bid and the headline caused the stock to move higher, but then another headline came out saying that that includes the debt, and the stock came down," the sellside trader said.

"Right now the bonds are basically versus $86. I think they are probably 109.5, 110.5, with the stock moving all over the place," the sellsider said in early afternoon.

When reports crossed the wires that Thermo Fisher was making a $6 billion bid, the stock jumped to $95.00 plus.

Shares of the Billerica, Mass.-based life science company settled higher by $16.01, or 22%, to $87.35, after spiking higher and then coming off some in heavy volume.

The Millipore convertibles trade on hedge on about a 35% delta.

"It's hard for people to trade, with the delta and who would own it. The market is probably about a point wide with the stock moving around hard. We'll have to wait until it all settles," a sellsider said.

Seagate steady

Seagate's former Maxtor bonds, the 2.375% bonds due 2012, were seen at 127.875 bid versus a share price of $20.70 in early afternoon, with no offer side.

That price was only slightly better than Friday's levels when the paper was among the top volume names, but up from 123.25 early in the Feb. 15 week.

Hard disk drive maker Maxtor agreed to be acquired by Seagate Technology, another disk drive maker, in December 2006.

The old Maxtor 6.8% convertibles due in May weren't heard in trade, but a pricing source said that that paper was 101.3 compared to 101 the previous session.

Shares of the Cayman Islands-based hard disk maker settled higher by 22 cents, or 1.1%, at $20.73 on Monday.

Trico Marine weakens further

Trico Marine's 3% convertibles due 2027 were seen lower by another 0.5 point to almost a point on Monday at the 36.5 level from 38 on Friday.

Trico Marine's 8.125% convertibles due 2013 were not heard in trade, but the paper traded Friday at 76.

Shares of the Woodlands, Texas-based subsea services provider moved lower on Monday by 4 cents, or 1.4% to $2.86.

Last week Trico Marine said it lost $129 million for the latest quarter, after a charge of $120 million relating to impairments and costs associated with early termination of a vessel contract.

Revenue for the fourth quarter was $150.8 million, which was down sequentially from $189.9 million in the third quarter due mostly to lower usage of subsea vessels, related to seasonality in the North Sea, and weak market conditions in the North Sea and Asia Pacific regions.

The company's outlook continues to reflect weakness.

Mentioned in this article:

Millipore Corp. NYSE: MIL

Seagate Technology NYSE: STX

Trico Marine Services Inc. Nasdaq: TRMA

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.