Danaher on tap; BioMarin Pharmaceutical, iQIYI convertible notes active post-earnings; Momo expands

By Abigail W. Adams

Portland, Me., Feb. 25 – One week after pricing the largest convertible bond deal of the year, the primary market rolled out the largest mandatory convertible preferred stock deal of the year.

Danaher Corp. plans to price $1.35 billion in par of $1,000 three-year series A mandatory convertible preferred stock after the market close Tuesday with price talk for a dividend of 5.25% to 5.75% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Barclays Capital Inc., Goldman Sachs & Co., Credit Suisse Securities LLC, HSBC Securities Inc., and Citigroup Global Markets Inc. are bookrunners for the registered offering, which carries a greenshoe of $135 million.

Proceeds from the deal will be used to support the high-profile acquisition of General Electric Co.’s biopharmaceutical unit by Danaher for $21 billion.

Meanwhile, the convertibles secondary space was firm on Monday with equity markets on the rise on news the U.S. tariff deadline would be extended due to positive development in U.S.-China trade talks.

Momo Inc.’s 1.25% convertible notes due 2025 expanded as its equity jumped as a result of optimism surrounding trade negotiations.

iQIYI Inc.’s 3.75% convertible notes due 2023 were among the volume movers of Monday’s session.

However, Fortive Corp.’s recently priced 0.875% convertible notes due 2022 continued to dominate activity in the secondary space although the notes were largely flat on a dollar-neutral basis.

The biotech sector was particularly strong on Monday with buyout news buoying the overall space.

In addition to Danaher’s buyout, Roche announced that it was buying Spark Therapeutics for $4.8 billion.

BioMarin Pharmaceutical Inc.’s convertible bonds were active with stock rebounding after initially dropping post-earnings.

Momo expands

Momo’s 1.25% convertible notes due 2025 expanded as equity jumped during Monday’s session.

The notes rose about 2.5 point outright.

They were changing hands around 91.25 and were expanded 0.75 point dollar-neutral, sources said.

Momo’s American Depositary Shares closed Monday at $35.34, an increase of 6.64%.

There was no reason in particular for the surge in Momo’s equity, a market source said.

The Beijing-based social networking platform’s equity was most likely riding the wave of optimism surrounding trade talks.

The Shanghai composite entered bull market territory after president Donald Trump announced a delay in the tariff increase.

iQIYI active

iQIYI’s 3.75% convertible notes due 2023 were among the most active issues of Monday’s session.

After large outright gains on Friday, the 3.75% convertible notes were largely flat on an outright basis on Monday.

The notes were changing hands between 126.75 and 127.75, according to Trace data.

IQ stock traded to a high of $29.18 and a low of $26.54 before closing the day at $27.00, a decrease of 2.53%.

The 3.75% convertible notes jumped 11 points outright as equity soared 23% on Friday after the online streaming service announced its fourth-quarter earnings report.

iQIYI reported revenue of RMB 7 billion, a 54% year-over-year increase, and a 72% year-over-year growth in new subscribers.

Fortive flat

Fortive’s 0.875% convertible notes due 2022 continued to dominate activity in the secondary space.

While the notes made gains on an outright basis, they were largely moving in line on a dollar-neutral basis, a market source said.

The notes were changing hands between 104.5 and 104.75.

More than $35 million of the bonds changed hands during Monday’s session.

Fortive stock traded as high as $82.27 but closed the day at $81.60, an increase of 0.28%.

The investment-grade status of the notes were largely driving their trading levels in the secondary space.

BioMarin eyed

BioMarin’s convertible notes were active on Monday with holders moving from one issue to another.

BioMarin’s 0.599% convertible notes due 2024 were changing hands just north of 103 early in the session, according to a market source.

The 0.599% notes traded as high as 105 but closed the day around 103.375. About $7 million of the bonds were on the tape by the late afternoon.

BioMarin’s 1.5% convertible notes due 2020 also saw some action.

The notes were changing hands around 115.75. About $7 million of the 1.5% notes changed hands during Monday’s session.

Holders were selling the longer duration notes and buying the shorter duration notes, a market source said.

BioMarin stock rebounded on Monday after dipping post-earnings. Stock traded as high as $95.00 but closed the day at $91.38, an increase of 3.99%.

Stock was on the rise after falling on Friday after the biotech company reported its fourth-quarter earnings report.

BioMarin reported a loss per share of 7 cents versus analyst expectations for earnings per share of 10 cents.

Revenue of $353.2 million missed analyst expectations of revenue of $380 million.

The earnings report came on the heels of news that BioMarin’s treatment for Batten disease was rejected by the National Institute for Health and Care Excellence in the United Kingdom.

Mentioned in this article:

BioMarin Pharmaceutical Inc. Nasdaq: BMRN

Danaher Corp. NYSE: DHR

Fortive Corp. NYSE: FTV

iQIYI Inc. Nasdaq: IQ

Momo Inc. Nasdaq: MOMO

© 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.