$100m (+15m) sen unsec cb coming tonight from JPM/MS. Terms: 5y,
2-2½% up 27½-32½%, full pctns. UOP=CB hedge/gcp/acq. $440m
drug discovery & development outsourcing biz w/stk up 1.9x YTD.
CRL=comp (albeit much larger). Co will lose $40m annual royalty from Allegra in ’15, representing ~16% of current rev. LTMebitda =45m,fcf=22m,PFcash=120m,PFdebt=107m,lev=2.4x. We’d assume L+700 ADV=340k, no leaps.Thin stk & -ve gama potential means we’ll cap vol @ 35%. Brw=top pre deal, now -50bp. We’ll assume GC. Theo= 99.9/101.9/104. Fundamental concerns=the loss of a material rev stream and having the lack of size/scale to attract new biz. Yet another yld enhanced eqty play which will have x/over interest.
Small deal=will get done but not a l/term hold for many.