Topic Archives: Merger Arb Using Converts

Advantest acquires Verigy

March 18, 2011 On March 18, Advantest offered to acquire Verigy for $15 per share. The conversion ratio for the converts were 76.263 but holders get an additional 8.5 shares under the make-whole matrix for a total of 84.763.  Following the announcement, the VRGY 5.25% converts were trading at 124.75 vs 14.06 stock price. Upon […]

ENDP acquires AMMD

 April 11, 2011 This is an example where a faster than expected close caused convert holders to lose the last coupon. AMMD agreed to be acquired by ENDP for $30 in cash with an expected closing date in late 3Q2011. According to the indenture, AMMD has 0 to 20 days after the merger completion to […]

SAP acquires SY

May 17, 2010 In May 2010, SY agreed to be acquired by SAP for $65 cash. The deal was expected to be completed by mid July 2010. The next coupon is 8/15/10. However, the indenture says you can hold the convert for between 20 to 30 days after the closing date before converting. In that […]

Astellas acquires OSIP

May 17, 2010 Astellas agrees to acquire OSI Pharmaceuticals (OSIP) for $57.5 in a tender offer scheduled to close 6/4/2010. The OSIP 3% converts has an interesting take out matrix because there is an incremental share factor involved. Make whole language Conversion rate = base conversion rate + ((57.7 – base conversion price)/57.5 times incremental share factor) […]