Gilead Sciences Inc. (GILD) Tuesday announced the pricing of its offering of $1.1 billion aggregate principal amount of 1.00% convertible senior notes due 2014 and $1.1 billion aggregate principal amount of 1.625% convertible senior notes due 2016. Gilead has also granted the initial purchasers a 13-day option to purchase up to $150 million in aggregate principal amount of additional 2014 notes and up to $150 million in aggregate principal amount of additional 2016 notes.
Both series of notes would pay interest semiannually in arrears on May 1 and November 1 of each year, beginning November 1, 2010. The 2014 notes would mature on May 1, 2014 and the 2016 notes would mature on May 1, 2016. Upon conversion, holders would receive cash up to the principal amount, and any excess conversion value would be settled, at Gilead's election, in cash, common stock or a combination of cash and common stock.
The initial conversion rate for the 2014 notes would be 22.1845 shares of Gilead common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $45.08 per share of common stock. The initial conversion rate for the 2016 notes would be 22.0214 shares of Gilead common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $45.41 per share of common stock.
Gilead estimates that the net proceeds from the offering would be approximately $2.166 billion after deducting discounts, commissions and expenses.Gilead expects to use at least $1 billion of the net proceeds from the offering to repurchase shares of its common stock in privately negotiated, off-market transactions from purchasers of the notes, contemporaneously with the pricing of the notes offering and thereafter, pursuant to its previously announced $5 billion stock repurchase program.
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