Morning Commentary: Tyson adds units sale to deal pipeline; Herbalife slated to release earnings

By Stephanie N. Rotondo

Phoenix, July 28 – Tyson Foods Inc. announced plans to sell up to $1.5 billion of tangible equity units on Monday, adding a new deal to the convertible pipeline.

Morgan Stanley & Co. LLC, RBC Capital Markets and J.P. Morgan Securities LLC are running the books.

The units will consist of a prepaid stock purchase contract and a senior amortizing note. The contract will settle July 15, 2017 – the same day the final installment payment on the notes is also due.

A trader noted that the food producer had put out earnings early in the day, showing a 4.4% increase in quarterly profit and announcing a sale of its Mexican and Brazilian units to JBS SA.

Proceeds from the units sale will be used to fund a merger with Hillshire Brands Inc.

Tyson’s stock was up $1.84, or 4.67%, at mid-morning, trading at $41.38.

Meanwhile, a trader said that Herbalife Ltd.’s equity was moving higher ahead of the company’s earnings release late Monday.

However, he noted that there was “not a lot of movement in the converts.”

The company’s 2% convertible notes due 2019 traded with a 94 to 95 handle on Friday.

The stock underlying the convertible debt was up $3.00, or 4.54%, at $69.09.

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