DexCom, Inc. (Nasdaq: DXCM) (“DexCom”) announced today the
pricing of its offering of $750.0 million aggregate principal
amount of 0.75% Convertible Senior Notes due 2023 (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”). DexCom also granted the initial purchasers of
the notes a 13-day option to purchase up to an additional $100.0
million aggregate principal amount of notes. The sale of the notes
is expected to close on November 30, 2018, subject to customary
closing conditions.
The notes will be senior, unsecured obligations of DexCom, and
will bear interest at a rate of 0.75% per year, payable
semi-annually in arrears. The notes will mature on December 1,
2023, unless earlier converted, repurchased or redeemed in
accordance with the terms of the notes. Prior to 5:00 p.m., New
York City time, on the business day immediately preceding September
1, 2023, the notes will be convertible at the option of holders
only upon satisfaction of certain conditions and during certain
periods, and thereafter, at any time until 5:00 p.m., New York City
time, on the second scheduled trading day immediately preceding the
maturity date. Upon conversion, the notes may be settled in shares
of DexCom’s common stock, cash or a combination of cash and shares
of common stock, at the election of DexCom. The initial conversion
rate is 6.0869 shares of common stock per $1,000 principal amount
of notes (equivalent to an initial conversion price of
approximately $164.29 per share of DexCom’s common stock,
representing an approximate 32.5% premium based on the last
reported sale price of Dexcom’s common stock on The Nasdaq Global
Select Market on November 27, 2018 of $123.99 per share). The
initial conversion rate and the corresponding conversion price will
be subject to adjustment upon the occurrence of certain events, but
will not be adjusted for any accrued and unpaid interest. Prior to
December 1, 2021, the notes will not be redeemable. On or after
December 1, 2021, and prior to September 1, 2023, DexCom may redeem
for cash all or part of the notes, at its option, if the last
reported sale price of DexCom’s common stock has been at least 130%
of the conversion price 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 on,
and including, the trading day immediately preceding the date on
which DexCom provides notice of redemption.
Holders of the notes will have the right to require DexCom to
repurchase for cash all or a portion of their notes at 100% of
their principal amount, plus any accrued and unpaid interest, upon
the occurrence of a fundamental change (as defined in the indenture
relating to the notes). DexCom will also be required to increase
the conversion rate for holders who convert their notes in
connection with certain fundamental changes occurring prior to the
maturity date or following the delivery by DexCom of a notice of
redemption.
DexCom estimates that the net proceeds from the offering will be
approximately $737.6 million (or approximately $836.0 million 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 DexCom. DexCom expects
to use approximately $31.0 million of the net proceeds to pay the
cost of the convertible note hedge transactions described below
(after such cost is partially offset by the proceeds of the warrant
transactions described below) to manage potential dilution and
approximately $100.0 million of the net proceeds to repurchase
shares of its common stock concurrently with the offering. DexCom
expects to repurchase such shares from purchasers of the notes in
the offering at a purchase price per share equal to the closing
price per share of its common stock on the date of the pricing of
the offering. DexCom intends to use the remainder of the net
proceeds from the offering for capital expenditures, working
capital and general corporate purposes, which may include
in-licensing or acquisitions of, or investments in, other
businesses, products or technologies, or additional share
repurchases. However, DexCom has no commitments or specific plans
with respect to any such acquisitions, investments or repurchases
at this time.
In connection with the offering of the notes, DexCom has entered
into convertible note hedge transactions with one or more of the
initial purchasers of the notes or their respective affiliates (the
“hedge counterparties”). The convertible note hedge transactions
are expected generally to reduce the potential dilution upon any
conversion of notes and/or offset any cash payments DexCom is
required to make in excess of the principal amount of converted
notes in the event that the market price per share of DexCom common
stock, as measured under the terms of the convertible note hedge
transactions, is greater than the strike price of the convertible
note hedge transactions, which initially corresponds to the
conversion price of the notes and is subject to certain adjustments
under the terms of the convertible note hedge transactions.
DexCom also has entered into warrant transactions with the hedge
counterparties pursuant to which DexCom sold warrants for the
purchase of DexCom common stock. The warrant transactions could
separately have a dilutive effect if the market price per share of
DexCom common stock, as measured under the terms of the warrant
transactions, exceeds the strike price of the warrant transactions.
The strike price of the warrant transactions will initially be
approximately $198.38 per share, which represents a premium of 60%
over the $123.99 per share closing price of DexCom common stock on
November 27, 2018, and is subject to certain adjustments under the
terms of the warrant transactions. If the initial purchasers
exercise their option to purchase additional notes, DexCom may
enter into additional convertible note hedge and warrant
transactions.
In connection with establishing their initial hedge of the
convertible note hedge and warrant transactions, the hedge
counterparties have advised DexCom that they or their affiliates
expect to enter into various derivative transactions with respect
to DexCom common stock and/or purchase DexCom common stock
concurrently with or shortly after the pricing of the notes. These
activities could have the effect of increasing (or reducing the
size of any decrease in) the price of DexCom common stock or the
notes at that time. In addition, the hedge counterparties and/or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
DexCom common stock and/or purchasing or selling DexCom common
stock in secondary market transactions following the pricing of the
notes and prior to the maturity of the notes (and are likely to do
so during any observation period related to a conversion of notes
or following any repurchase of notes by DexCom on any fundamental
change repurchase date or otherwise). This activity could also
cause or avoid an increase or a decrease in the market price of
DexCom common stock or the notes, which could affect the ability of
holders of the notes to convert their notes and, to the extent the
activity occurs during any observation period related to a
conversion of notes, it could affect the amount and value of the
consideration that holders of notes will receive upon conversion of
the notes.
If the initial purchasers exercise their option to purchase
additional notes, DexCom may use the resulting additional proceeds
of the sale of the additional notes and any additional warrants to
pay the cost of entering into the additional convertible note hedge
transactions and for general corporate purposes, including
potential acquisitions and strategic transactions.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities (including the shares of
DexCom’s common stock, if any, into which the notes are
convertible) and shall not constitute an offer, solicitation or
sale in any jurisdiction in which such offer, solicitation or sale
is unlawful. Any offers of the notes will be made only by means of
a private offering memorandum.
The offering is being made to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The notes and any
shares of DexCom’s common stock issuable upon conversion of the
notes have not been and are not expected to be registered under the
Securities Act, or any state securities laws and may not be offered
or sold in the United States absent registration or an applicable
exemption from such registration requirements.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934 that
involve risks and uncertainties, including, without limitation,
statements regarding the timing and closing of DexCom’s offering of
the notes and expected use of net proceeds of the offering.
Statements containing words such as “could,” “believe,” “expect,”
“intend,” “will,” or similar expressions constitute forward-looking
statements. Factors that may contribute to such differences
include, but are not limited to, risks related to whether DexCom
will close the offering of the notes on the expected date, or at
all, prevailing market and other general economic conditions,
whether DexCom will be able to satisfy the conditions required to
close any sale of the notes and the expected use of the net
proceeds from the offering. The foregoing list of risks and
uncertainties is illustrative, but is not exhaustive. For
information about other potential factors that could affect
DexCom’s business and financial results, please review the “Risk
Factors” described in DexCom’s Annual Report on Form 10-K for the
year ended December 31, 2017 and DexCom’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2018 filed with the
Securities and Exchange Commission, or SEC, and in DexCom’s other
filings with the SEC. Except as may be required by law, DexCom does
not intend, and undertakes no duty, to update this information to
reflect future events or circumstances.
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version on businesswire.com: https://www.businesswire.com/news/home/20181128005251/en/
Steven R. PacelliExecutive Vice President, Strategy and
Corporate Development(858) 200-0200
DexCom (NASDAQ:DXCM)
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