Morning Commentary: Micron in focus amid buyout rumors; WPX Energy plans mandatory deal

By Rebecca Melvin

New York, July 14 – U.S. convertibles were a little more active on Tuesday as equities continued to rise, compared to the quiet Monday session.

Some of the better action may have been spurred by takeover chatter, a New York-based trader said.

Micron Technology Inc. was rumored to be getting a bid from China’s Tsinghua Unigroup chip maker as early as Wednesday. Micron said it has not yet received an offer, but speculation sent the underlying shares of the Boise, Idaho-based chipmaker up 12%.

Micron’s 3% convertibles due 2043 jumped to 92 to 93 from about 88 on an outright basis, according to Trace data. Shares were up to about $19.50, which was shy of the $21.00 per share bid price that was reported to be in the offing.

Micron shares plunged June 25 after the company reported disappointing third-quarter results that pointed to a continuing weak PC demand.

The Micron 3% bonds had been at 105 versus an underlying share price of $25.19 in early June and were 94.75 versus an underlying share price of $20.50 in late June.

In primary action, WPX Energy Inc. launched an offering of $300 million of mandatory convertible preferred shares, together with $1.2 billion of straight notes and 27 million shares of common stock, to help fund its acquisition of RKI Exploration and Production LLC.

The $50.00 par mandatory was talked at a 6% to 6.5% dividend and 17.5% to 22.5% initial conversion premium.

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