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Morning Commentary: 3D Systems convertible notes in focus on merger update
By Abigail W. Adams
Portland, Me., July 28 – It was a slow start to the day in the convertibles secondary space as equity markets resumed their rally after the surprise reversal of the previous session.
Markets were responding favorably to the Bank of Japan’s surprise policy shift to give more flexibility to its bond yield control program, a sign the country was moving away from stimulus and normalizing its behavior relative to other central banks.
The Dow Jones industrial average was up 229 points, or 0.65%, the S&P 500 index was up 0.96%, the Nasdaq Composite index was up 1.65% and the Russell 2000 index was up 1.16% shortly before 11 a.m. ET.
Trading activity was at a crawl with $46 million on the tape about one hour into the session and only one name seeing $5 million in reported volume.
Topical news spurred activity in 3D Systems Corp.’s 0% convertible notes due 2026, which improved after the company gave an update on its takeover attempt of Stratasys Ltd.
The 0% convertible notes were changing hands at 77 versus a stock price of $9.03, according to a market source.
The yield was 8%.
There was $5 million in reported volume.
3D Systems’ stock was trading at $8.70, an increase of 1.64%, shortly before 11 a.m. ET.
The notes were in focus after the 3D printing company provided an update on its takeover attempt of Stratasys.
The company announced on Thursday that it had submitted a final proposal to buy all outstanding shares of Stratasys and finalize due diligence and merger agreement discussions by Aug. 4.
3D Systems’ acquisition offer for Stratasys came after Stratasys and Desktop Metal announced their $1.8 billion all-stock merger transaction in May.
3D Systems has offered to reimburse Desktop Metal for any termination fees incurred for ending their merger agreement with Stratasys.
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