Splunk Inc. (Nasdaq: SPLK) today announced the pricing
of $1.1 billion principal amount of 0.500% Convertible Senior
Notes due 2023 (the “2023 notes”) and $750 million principal amount
of 1.125% Convertible Senior Notes due 2025 (the “2025 notes,” and
together with the 2023 notes, the “notes”) in a private placement
to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). The size
of the offering was increased from the previously announced $1.7
billion total aggregate principal amount ($850 million principal
amount of each of the 2023 notes and the 2025 notes). Splunk also
granted the initial purchasers of the notes an option to purchase
up to an additional $165 million principal amount of 2023
notes and up to an additional $112.5 million principal amount
of 2025 notes. The sale of the notes is expected to close on
September 21, 2018, subject to customary closing conditions.
The notes will be senior unsecured obligations of Splunk and
will accrue interest payable semiannually in arrears on March 15
and September 15 of each year, beginning on March 15, 2019, at a
rate of 0.500% per year for the 2023 notes and 1.125% per year for
the 2025 notes. The 2023 notes will mature on September 15, 2023
and the 2025 notes will mature on September 15, 2025, in each case,
unless earlier converted, repurchased or redeemed. The initial
conversion rate of the 2023 notes will be 6.7433 shares of Splunk’s
common stock per $1,000 principal amount of such notes (equivalent
to an initial conversion price of approximately $148.30 per share),
and the initial conversion rate of the 2025 notes will be 6.7433
shares of Splunk’s common stock per $1,000 principal amount of such
notes (equivalent to an initial conversion price of approximately
$148.30 per share). The initial conversion price of the 2023 notes
represents a premium of approximately 27.5% over the last report
sale price of Splunk’s common stock on the Nasdaq Global Select
Market on September 18, 2018, and the initial conversion price of
the 2025 notes represents a premium of approximately 27.5% over
such last report sale price. The notes will be convertible into
cash, shares of Splunk’s common stock or a combination of cash and
shares of Splunk’s common stock, at Splunk’s election.
Splunk may redeem the 2023 notes, at its option, on or after
September 20, 2021 and the 2025 notes, at its option, on or after
September 20, 2022, if the last reported sale price of Splunk’s
common stock has been at least 130% of the conversion price for the
relevant series of notes then in effect for at least 20 trading
days (whether or not consecutive) during any 30 consecutive trading
day period (including the last trading day of such period) ending,
and including, the trading day immediately preceding on the date on
which Splunk provides notice of redemption at a redemption price
equal to 100% of the principal amount of the relevant series of
notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date.
If Splunk undergoes a “fundamental change”, holders of the notes
may require Splunk to repurchase for cash all or any portion of
their notes at a repurchase price equal to 100% of the principal
amount of the relevant series of notes to be repurchased, plus
accrued and unpaid interest. In addition, upon certain corporate
events that occur prior to the maturity date of the relevant series
of notes or if we deliver a notice of redemption in respect of a
series of notes, Splunk will, under certain circumstances, increase
the conversion rate of the relevant series of notes for holders who
convert their notes of the applicable series in connection with
such a corporate event or a notice of redemption, as the case may
be.
Splunk estimates that the net proceeds from the offering will be
approximately $1.83 billion (or $2.10 billion if the initial
purchasers exercise their option to purchase additional notes in
full), after deducting the initial purchasers’ discount and
estimated offering expenses payable by Splunk. Splunk intends to
use a portion of the net proceeds from the offering to pay the cost
of the capped call transactions described below. Splunk intends to
use the remainder of the net proceeds for working capital and other
general corporate purposes. Splunk may also use a portion of the
net proceeds for the acquisition of, or investment in,
technologies, solutions or businesses that complement its business,
although it has no commitments to enter into any such acquisitions
or investments at this time. If the initial purchasers exercise
their option to purchase additional notes, Splunk expects to use a
portion of the net proceeds from the sale of the additional notes
to enter into additional capped call transactions as described
below. Splunk intends to use the remainder of the net proceeds from
the sale of the additional notes for working capital and other
general corporate purposes.
In connection with the pricing of the notes, Splunk entered into
capped call transactions relating to each series of notes with one
or more of the initial purchasers or their respective affiliates
and/or other financial institutions (the “option counterparties”).
The capped call transactions relating to the 2023 notes are
expected generally to offset the potential dilution to Splunk’s
common stock upon any conversion of 2023 notes and/or offset any
cash payments Splunk is required to make in excess of the principal
amount of converted 2023 notes, as the case may be, with such
offset subject to a cap based on a cap price. The capped call
transactions relating to the 2025 notes are expected generally to
offset the potential dilution to Splunk’s common stock upon any
conversion of 2025 notes and/or offset any cash payments Splunk is
required to make in excess of the principal amount of converted
2025 notes, as the case may be, with such offset subject to a cap
based on a cap price. If, however, the market price per share of
Splunk’s common stock, as measured under the terms of the capped
call transactions, exceeds the relevant cap price of the capped
call transactions, there would nevertheless be dilution and/or
there would not be an offset of such potential cash payments, in
each case, to the extent that such market price exceeds such cap
price. In addition, to the extent any observation period for any
converted notes does not correspond to the period during which the
market price of Splunk’s common stock is measured under the terms
of the related capped call transactions, there could also be
dilution and/or a reduced offset of any such cash payments as a
result of the different measurement periods. The cap price of the
capped call transactions relating to each series of notes will
initially be approximately $232.62, which represents a premium of
approximately 100% over the last report sale price of Splunk’s
common stock on the Nasdaq Global Select Market on September 18,
2018, and is subject to certain adjustments under the terms of the
capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates may purchase shares of Splunk’s common stock
and/or enter into various derivative transactions with respect to
Splunk’s common stock concurrently with or shortly after the
pricing of the notes, including with certain investors in the
notes. This activity could increase (or reduce the size of any
decrease in) the market price of Splunk’s common stock or the notes
at that time.
In addition, Splunk expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
Splunk’s common stock and/or purchasing or selling Splunk’s common
stock or other securities of Splunk in secondary market
transactions following the pricing of the notes and prior to the
maturity of each series of notes (and are likely to do so on each
exercise date for the capped call transactions, which are expected
to occur during each 30 trading day period beginning on the 31st
scheduled trading day prior to the maturity date of each series of
notes, or following any termination of any portion of the capped
call transactions in connection with any repurchase, redemption or
early conversion of the notes). This activity could also cause or
prevent an increase or a decrease in the market price of Splunk’s
common stock or the notes, which could affect a noteholder’s
ability to convert its respective notes and, to the extent the
activity occurs during any observation period related to a
conversion of the respective series of notes, this could affect the
amount and value of the consideration that a noteholder will
receive upon conversion of its notes.
Neither the notes, nor any shares of Splunk’s common stock
issuable upon conversion of the notes, have been registered under
the Securities Act or any state securities laws, and unless so
registered, may not be offered or sold in the United
States absent registration or an applicable exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of any securities in any
state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to the registration or qualification under
the securities laws of any such state or jurisdiction.
About Splunk
Splunk Inc. (NASDAQ: SPLK) turns machine data into answers.
Organizations use market-leading Splunk solutions with machine
learning to solve their toughest IT, Internet of Things and
security challenges.
Splunk, Splunk>, Listen to Your Data, The Engine for Machine
Data, Splunk Cloud, Splunk Light and SPL are trademarks and
registered trademarks of Splunk Inc. in the United States and other
countries. All other brand names, product names, or trademarks
belong to their respective owners. © 2018 Splunk Inc. All rights
reserved.
SOURCE Splunk Inc.
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version on businesswire.com: https://www.businesswire.com/news/home/20180919005243/en/
Investor Contact:Ken Tinsley,
415-848-8476ktinsley@splunk.comorMedia Contact:Tom Stilwell,
415-852-5561tstilwell@splunk.com
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