Axon prices $1B offering of 0% convertible senior notes due 2031, adds capped calls

Axon Enterprise Inc., a company listed on the NASDAQ under the ticker AXON, has announced the pricing of a $1.0 billion offering of 0% convertible senior notes due for redemption in the year 2031. In a press release, the company revealed that underwriters were granted the option to purchase up to an additional $150.0 million in notes, known as an over-allotment option. The sale is anticipated to close on Friday, pending the fulfillment of certain customary conditions.

According to Axon's projections, the company anticipates net proceeds of approximately $986.0 million following the deduction of underwriters' discount and estimated offering expenses. This amount could potentially increase to $1,134.3 million if the over-allotment option is exercised to its full extent. The notes are scheduled to mature on September 15, 2031, unless they are converted, redeemed, or repurchased earlier.

These convertible notes allow conversion at an initial rate of 1.5336 shares for every $1,000 of principal amount, which translates to a conversion price of roughly $652.06 per share. Axon plans to utilize $99.9 million of the net proceeds to fund capped call transactions, which could amount to approximately $114.9 million if the over-allotment option is fully utilized.

The remaining funds from the offering are intended for general corporate use, potentially supporting growth and acquisitions or investments in various product lines, products, services, or technologies.

To manage the potential dilution impact on Axon's common stock from the conversion of these notes, the company has established a cap price of $1,049.94. This cap price signifies a 137.5% premium over the last reported NASDAQ sale price of $442.08 per share, observed on Monday. The notable underwriters for this offering include Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, and Citigroup Global Markets Inc., who are jointly serving as the lead book-running managers.