aibioHalozyme prices upsized $1.3 billion convertible offering and retires older notes
Tickers HALO
The 1.50% notes due 2033 convert at about $139.84 a share, a 27.5% premium to the Sept. 17 close. Part of the proceeds repurchases 2027 and 2028 notes and pays for capped calls.
Key facts
- Company
- Halozyme Therapeutics, Inc. (NASDAQ: HALO)
- News type
- Financings
- Primary source
- Halozyme Therapeutics (SEC Form 8-K, Exhibit 99.1)
Halozyme Therapeutics priced an upsized $1.3 billion offering of 1.50% convertible senior notes due 2033 on Sept. 17 and used part of the money to repurchase older convertible notes, the company said. The offering was raised from the $1.05 billion Halozyme had announced a day earlier.
Halozyme expected net proceeds of about $1.275 billion and a Sept. 22 close. It filed the indenture and a form of capped call confirmation with the SEC on Sept. 22, in an 8-K covering the closing.
The details
The notes mature on Oct. 1, 2033 and pay interest twice a year. The initial conversion rate of 7.1509 shares per $1,000 of principal works out to a conversion price of about $139.84, a premium of about 27.5% to the $109.68 closing share price on Sept. 17, the company said. Initial purchasers have a 13-day option for up to $200 million more notes. Halozyme can settle conversions in cash and, if it chooses, shares.
Halozyme also bought capped calls. They cover the shares underlying the notes and have an initial cap price of about $208.39, a premium of about 90% to the Sept. 17 price. The company said it expected to spend about $162.5 million of the proceeds on them. Capped calls are meant to reduce dilution, or offset cash payments above principal, if the stock rises past the conversion price and stays below the cap.
Two repurchases ran alongside the sale. Halozyme agreed to repurchase about $151.7 million of principal of its 0.25% notes due 2027 for about $217.0 million, and $220.0 million of principal of its 1.00% notes due 2028 for about $435.5 million, both including accrued interest. The company plans to use the rest of the money for general purposes, including working capital, possible acquisitions and further note repurchases.
Context
Halozyme's June 30 balance sheet showed $2.18 billion in principal of convertible notes outstanding, in four series due 2027, 2028, 2031 and 2032. That included $209.6 million of 2027 notes and $470.0 million of 2028 notes. Cash, restricted cash and marketable securities were $231.9 million, up from $145.4 million at year-end.
The company has been returning cash to shareholders. In May it set a $1.0 billion repurchase program running to the end of 2028 and said it expected to repurchase at least $400 million of shares in 2026. In the second quarter it repurchased 4.8 million shares for $332.8 million, an average of $69.30 a share, according to its second-quarter report.
What it means for investors
By my arithmetic from these filings, convertible principal will rise to about $3.1 billion if the deal closes and the repurchases settle as described, before any exercise of the additional-notes option. That is $2.18 billion, minus $371.7 million repurchased, plus $1.3 billion.
The trade swaps near-term maturities for a longer one at a low coupon, and it adds cash for deals. It also raises the debt load while the company's litigation with Merck over its subcutaneous Keytruda product continues. The repurchase prices matter too. Paying $435.5 million for $220.0 million of 2028 principal implies those notes trade far above par, which probably reflects conversion value and the stock's climb from the $69.30 average Halozyme paid for shares in the second quarter. The conversion price on the 2028 notes is not in the documents reviewed here.
The use-of-proceeds language leaves room for acquisitions. Halozyme bought Elektrofi and Surf Bio in the fourth quarter of 2025.
What to watch
Whether the initial purchasers exercise the $200 million option, which has a 13-day window. Third-quarter results should show the closing cash and debt balances and any further note repurchases.