SanDisk 0.5% contracts on swap as SanDisk 1.5% rides higher; Horizon Pharma, Tesla drop

By Rebecca Melvin

New York, Oct. 20 – SanDisk Corp. was a centerpiece of trade in U.S. convertibles again on Tuesday as shares of the Milpitas, Calif.-based flash memory chip maker moved up again amid reports that a potential acquisition of the company may be imminent.

Talks between SanDisk and Western Digital Corp. accelerated over the weekend and a deal could be forthcoming as early as this week, according to a Bloomberg report. A sale price of between $80.00 and $90.00 per SanDisk share was discussed.

The longer-dated SanDisk 0.5% convertibles, which have been weaker than its sister 1.5% convertibles because it has weaker prospects in the event of a takeout, contracted 2 points on a dollar-neutral, or swap, basis initially on Tuesday. But they rallied back by about 0.5 point to end down 1.5 points on the day, a New York-based trader said.

The SanDisk 1.5% convertibles continued to push higher on a swap basis.

In the biotech sector, many shares were selling off. Horizon Pharma plc’s 2.25% convertibles dropped into the upper 80 range from the upper 90s and shares skidded 20% after a damaging news report on pricing of its Duexis pain reliever drug and Prescriptions Made Easy program.

Elsewhere, Tesla Motors Inc. was also in focus after news that Consumer Reports had pulled its recommendation for the company’s Model S electric car based on surveys of Tesla car owners.

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