FX.co ★ Datadog Announces Pricing Of Upsized Offering Of $870 Mln Convertible Senior Notes

Datadog, Inc. (DDOG), a prominent software solutions provider, on Tuesday announced the pricing of a $870 million aggregate principal amount of 0% Convertible Senior Notes due in 2029 through a private placement. The finalization of this sale is anticipated for December 12.

Initially planned at $775 million, the offering has been increased in size. Additionally, Datadog has granted initial purchasers an option to acquire up to an additional $130 million in notes within 13 days following their issuance.

Post deduction of discounts, commissions, and associated costs, the company expects to net approximately $851.6 million from this offering. Should the initial buyers fully exercise their option to purchase additional notes, total proceeds could reach around $979.0 million.

Datadog intends to allocate a portion of the funds raised to cover the $87.8 million cost of entering into capped call transactions, as well as to repurchase $112.0 million of its outstanding 0.125% Convertible Senior Notes due in 2025.

Noteholders will have the option to convert their notes before September 1, 2029, under specified conditions and at designated times. From September 1 onwards, conversion is permitted anytime until two days prior to the notes' maturity. Upon conversion, Datadog may choose to settle using cash, Class A shares, or a combination of both. Notably, each $1,000 of notes can be converted into 4.5955 shares, equating to approximately $217.60 per share, representing a 35 percent premium over the stock's price as of December 9.

The capped call transactions have a starting cap price of $322.38, which is double the last reported price of Datadog's Class A stock on December 9. Datadog aims to engage with current option holders to conclude certain existing capped call transactions.

On Monday, DDOG closed trading at $161.19, reflecting a 4.42% decline. In after-hours trading, the stock edged up by 0.09% to $161.33.