PetIQ drops on convertible debt offering to fund acquisition of Elanco unit

PetIQ

14/05/2020 19:11

** PetIQ Inc  PETQ.O  shares down 13.0% to $23.6 as co looks
to price convertible deal after the bell
    ** Pet health and wellness product maker offering privately
$125 mln 6-yr convertible notes  urn:newsml:reuters.com:*:nGNX6gTcBN
    ** Co to use net proceeds to fund previously announced
acquisition of Capstar portfolio from Elanco Animal Health Inc
 ELAN.N 
    ** PETQ on Jan 13 agreed to buy the oral over-the-counter
flea treatment product from ELAN for $95 mln in cash
    ** In its qtrly report last week, PETQ said anticipates U.S.
FTC to approve the acquisition by end of Q2 2020, with closing
anticipated early Q3  urn:newsml:reuters.com:*:nGNX5qw8Pv
    ** Sole bookrunner Jefferies marketing notes with 3.5%-4%
coupon, 25%-30% convertible premium
    ** PETQ had market cap of ~$770 mln as of Weds close, per
Refinitiv data
    ** ~1.2 mln PETQ shares have traded Thurs, triple the 30-DMA
volume
    ** With Thurs decline, stock now in the red YTD by ~6%
    ** Meanwhile, ELAN shares on Thurs off 0.5% at $19.20 and
are down ~35% in 2020

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper.tr.com@reuters.net
lance.tupper@tr.com 646-223-5017))