JWCA advises Akamai on its upsized ~$1.3bn convertible and call spread transaction

August 2023 | read press release

Transaction Background

Akamai Technologies (“Akamai”) successfully raised an upsized ~$1.3bn convertible (inclusive of greenshoe) at attractive terms (1.125% coupon and 22.5% conversion premium)

Akamai's objectives included:

• Low cost of capital

• Prefund payment at maturity of the company’s $1.15bn outstanding 2025 convertible or cover cash due upon early conversion

• Purchase call spread and share repurchase to neutralize technical stock price impact

Akamai engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction

JWCA provided extensive analysis on deal structuring and related items, including:

• Convertible and derivative overlay structuring

• Convertible and call spread documentation to ensure maximum value and future efficiency/flexibility for the company

• Accounting and tax analysis/implications

JWCA designed and ran a call spread auction process to achieve very competitive terms

JWCA provided advice, support and analysis throughout the execution process

Results

Akamai’s convertible issuance was well received by investors

• The transaction was multiple times oversubscribed and upsized by $100 million (10%)

• The 1.125% coupon priced on the low end of the marketed coupon range, a key company objective

• Akamai’s stock price traded down just -0.8% on the day of the offering which was better than the major U.S. indices (S&P 500 -1.2%, Nasdaq -1.1%) on a day when the market faced macro headwinds

Call spread documentation and auction process produced meaningful savings for Akamai, while maximizing flexibility

Best convertible terms for an investment grade issuer in > 4.00% rate environment

Second best interest rate savings for an investment grade issuer