Amgen and Teva Pharmaceutical Industries have both announced plans to sell billions of dollars worth of debt.
First up, Amgen is launching a modified 'Dutch auction' tender offer to purchase up to $5 billion of its common stock, and announced a public offering of its senior notes to pay for it. Specifically, the firm will purchase the shares for between $54-$60 each using the modified Dutch auction method which allows stockholders to state the amount of shares they wish to tender and the price they are willing to pay within the company's range.
To pay for all this, Amgen has sold $6 billion of debt, with bonds being sold at various stages of maturity. However, the Financial Times quoted a person familiar with the deal as saying that the all-in interest cost is about 3.8%.
Amgen chief executive Kevin Sharer said that "our strong balance sheet and cash flow enable us to complete this transaction in an attractive interest rate environment while also preserving the flexibility to further accelerate the growth of our business through focused, strategic acquisitions".
Both Moody's Investor Service and Fitch Ratings downgraded Amgen but the news led to a 6% rise in the company's share price.
Meantime, Teva has made a $5 billion debt offering, consisting of six tranches which mature between 2013 and 2021. The Israeli drugmaker's chief financial officer Eyal Desheh said the firm's ability to raise this amount "in a volatile market is a testament to our strength, as well as to the market’s confidence in our business performance".
He added that in addition to being the largest offering ever done by an Israeli company, "we had demand substantially in excess of the final order book, indicating extraordinary interest by investors". The proceeds will be used to repay $3.75 billion of short-term debt used to finance its acquisition of Cephalon last month and for general corporate purposes.