Health care names weaker after Actavis launches large mandatory; Priceline slightly better

By Rebecca Melvin

New York, Feb. 19 – Health care names in the convertibles space were generally weaker Thursday on the heels of the launch of Actavis plc’s $4.2 billion of mandatory convertible preferred stock.

Actavis plans to buy Allegan Inc. with $4.2 billion in stock, $4.2 billion in mandatories and other debt financing.

Sellers materialized in the convertibles of BioMarin Pharmaceutical Inc., Hologic Inc., Jazz Pharmaceuticals Inc., among others, and including the new Wright Medical Group Inc. bond, which priced last week.

“It’s the first sign of paper and reminded people that there will probably be more on the way,” a New York-based trader said.

Actavis is pricing $4.2 billion of common stock and $4.2 billion of mandatory convertibles, along with other debt financing, to fund the company’s purchase of Allergan. The deals were expected to price next week. The mandatories were talked at a 5.75% to 6.25% yield and a 17.5% to 22.5% premium.

Several convertibles issuers reported quarterly results that spurred trades in their convertible debt Thursday.

Priceline Group Inc. posted earnings that were better than forecasted, sending shares of the Norwalk, Conn.-based internet travel services company up 8.5%.

Priceline’s 1% convertibles due 2018 rose 7 points in active trade to nearly 140, according to Trace data, with shares at $1,214.89.

Also trading was Priceline’s 0.9% convertibles due 2021 which were up nearly 2 points at 96.8, and Priceline’s 0.35% convertibles due 2020, which were up 4 points to 116.

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