Wednesday, October 15, 2014

Merck Sees Only Tepid Response -- To Its Euro Notes Tender Offer -- A Light Response


The results were in -- as of last night. And they are decidedly. . . anemic:



Principal Principal
CUSIP Amount Amount Aggregate Total
Title of Notes Number Outstanding Tendered and Accepted Consideration(1)
6.30% Debentures due 2026 589331AC1 $250,000,000 $96,923,000 $129,669,405
6.40% Debentures due 2028 589331AD9 $500,000,000 $173,493,000 $236,395,008
5.95% Debentures due 2028 589331AE7 $500,000,000 $142,255,000 $189,907,185
6.50% Senior Notes due 2033 806605AG6 $1,150,000,000 $432,389,000 $616,004,910
5.75% Notes due 2036 589331AM9 $500,000,000 $127,870,000 $171,679,328
5.76% Notes due 2037 58933NAL3 $112,947,000 $33,815,000 $44,687,537
6.55% Senior Notes due 2037 806605AH4 $1,000,000,000 $475,948,000 $678,701,055
5.85% Notes due 2039 589331AQ0 $750,000,000 $331,093,000 $445,642,073


This shows us that investors prefer the fatter coupons on the old notes, compared to the new ones. Citi and JP Morgan likely advised Merck of this probability. So, Merck may now run a mandatory redemption. We shall see.

Honestly, I haven't bothered to check the SEC filings -- to read and see whether/if the Noteholders may be forced into a redemption. But that would make sense, if Merck has that right. We will watch for it.

Even so, overall, none of this is material to Mothership Merck. Oh, and also, speaking of immaterialities -- it seems an ex-Merck financial analyst was inside-tipping a fellow college alum from Rutgers, on the Idenix acquisition. Or so sayeth the SEC. Immaterial.Onward!

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