Jazz Pharmaceuticals plans $850 million note offering

DUBLIN - Jazz Pharmaceuticals plc (NASDAQ:JAZZ) announced its intention to offer $850 million in exchangeable senior notes due 2030 through its subsidiary, Jazz Investments I Limited, to qualified institutional buyers. The private offering is contingent on market conditions and other factors. The company also intends to provide an option for the initial purchasers to buy an additional $150 million in notes within 13 days of issuance.

The notes, which will be general unsecured obligations of the issuer, are exchangeable under certain conditions, with settlements made in cash, ordinary shares, or a combination of both, at the issuer's discretion. Interest rates and other terms will be established at the time of pricing.

Jazz Pharmaceuticals plans to use a portion of the net proceeds to prepay approximately $350 million of the term loans under its credit agreement, with the remainder allocated for general corporate purposes. If the option for additional notes is exercised, the proceeds will further prepay the term loans.

Concurrently with the offering, the company expects to repurchase up to $150 million of its ordinary shares. The repurchase price per share will be equal to the closing price on the date of the offering and will be funded with existing cash, reducing the amount authorized under its July 2024 share repurchase program.

The notes, the guarantee, and any shares issued upon exchange have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. without registration or an applicable exemption.

This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.

In other recent news, Jazz Pharmaceuticals has been making significant strides in both the legal and financial fronts. The company recently retained its Buy rating and $200 target from an analyst firm, following a court ruling that allows it to maintain its market position for its narcolepsy and idiopathic hypersomnia treatments, Xywav. This decision prevents a new competitor, Avadel Pharmaceuticals (NASDAQ:AVDL), from entering the market until a specific patent expires.

Simultaneously, Jazz Pharmaceuticals posted record revenues in Q2 2024, exceeding the $1 billion mark, largely driven by the sales of Xywav and Epidiolex. The company has revised its full-year revenue outlook to a range of $4 billion to $4.1 billion and announced a new $500 million share repurchase authorization.

Jazz Pharmaceuticals also won a patent infringement lawsuit against Avadel Pharmaceuticals, securing its rights related to controlled release formulations of oxybate. This grants Jazz Pharmaceuticals the right to receive ongoing royalties from Avadel for any future sales of Lumryz to narcolepsy patients.

However, the company's Phase III study of Epidiolex in Japan did not meet its primary endpoint, despite reporting positive results in other measures. Nonetheless, TD Cowen maintains a Buy rating on the company, stating this development does not impact their financial estimates for Jazz Pharmaceuticals. These are the recent developments surrounding Jazz Pharmaceuticals.

InvestingPro Insights

In light of Jazz Pharmaceuticals' recent announcement regarding its exchangeable senior notes offering, insights from InvestingPro suggest a robust financial outlook for the company. Management's active share buyback initiative underscores a strong confidence in the company's value, aligning with the repurchase of up to $150 million of its ordinary shares concurrent with the offering. This strategy is indicative of a proactive approach to capital management, which is further evidenced by Jazz's impressive gross profit margin of 92.6% in the last twelve months as of Q2 2024.

InvestingPro Data also highlights a notable expectation of net income growth this year, which may be a key factor for investors considering the company's future profitability. With a market capitalization of $7.16 billion and a forward-looking P/E ratio of 12.58, Jazz Pharmaceuticals is positioned with a valuation that implies a strong free cash flow yield. Moreover, the company's stock has historically exhibited low price volatility, which could be appealing for investors seeking stability in their portfolios.

For those interested in deeper analysis, InvestingPro offers additional insights and metrics. There are 16 more InvestingPro Tips available for Jazz Pharmaceuticals, including the latest analyst earnings revisions and liquidity assessments, which can be found at https://www.investing.com/pro/JAZZ. These tips could provide a more comprehensive understanding of the company's financial health and market position.

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