Snap Inc. Is Planning a $1B Private Offering With an Eye Toward Acquisitions

The convertible senior notes will mature Aug. 1, 2026

Will Snap soon add acquisitions to its cup?
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Snapchat parent Snap Inc. appears to be in acquisition mode.

The company said Tuesday that it is planning a private offering of $1 billion of convertible senior notes due in 2026, to qualified institutional buyers, with the initial purchasers to be granted an option to purchase an additional $150 million of notes.

The move follows last month’s strong second-quarter-2019 earnings report and the company’s stock surging past its $17-per-share March 2017 initial public offering price, also last month. The stock closed trading Monday at $16.46.

Snap said in a release that net proceeds from the offering will be used for “general corporate purposes,” including working capital, operating expenses, capital expenditures and paying the cost of capped call transactions with initial purchasers in the offering.

The company added, “Snap may also use a portion of the net proceeds to acquire complementary businesses, products, services or technologies or for repurchases of Snap’s common stock, although it has no commitments for any material acquisitions or stock repurchases at this time.”

Snap said the notes will be general unsecured obligations and accrue interest paid semiannually in arrears, and they will mature Aug. 1, 2026, unless repurchased, redeemed or converted prior to that date.

The company added that the notes will be convertible prior to the close of the business day immediately preceding May 1, 2026, and after that, holder can do so at any time until the close of business on the day immediately preceding the maturity date. On conversion, Snap will settle the notes in cash, class-A shares or a combination, with the interest rate, initial conversion rate and other terms to be determined at the time the offering is priced.