Novanta Prices $550 Million Tangible Equity Units Offering to Bolster Financial Flexibility and Drive Growth Initiatives
Novanta Inc. (Nasdaq: NOVT), a leading global technology partner serving medical and advanced technology equipment manufacturers, announced that it has successfully priced its previously disclosed public offering of 11 million tangible equity units (TEUs) at $50.00 per unit. Each unit carries a 6.50% annual yield, reflecting investor confidence in the company’s financial health and growth outlook. The total offering, valued at $550 million, marks an important step in Novanta’s broader strategy to strengthen its balance sheet, fund potential acquisitions, and enhance long-term shareholder value.
The offering will be conducted under a prospectus supplement filed pursuant to Novanta’s effective shelf registration statement. The company’s common shares trade on Nasdaq under the symbol “NOVT,” and Novanta has applied to list the tangible equity units on Nasdaq under the ticker “NOVTU.” The offering is expected to close on November 12, 2025, pending customary closing conditions.
Structure of the Offering
Each tangible equity unit consists of two key components:
- A prepaid stock purchase contract, and
- A senior amortizing note due 2028, both issued directly by Novanta.
This hybrid structure provides investors with a balanced mix of equity and debt characteristics, combining predictable income through the note’s amortization schedule and potential upside from Novanta’s share performance.
The company has granted underwriters a 30-day option to purchase up to 1.65 million additional TEUs to cover potential over-allotments. This flexibility underscores the strong institutional interest in the offering.
Settlement and Conversion Terms
Each stock purchase contract will automatically settle on or before November 1, 2028, unless converted earlier under specific circumstances. Upon settlement, investors will receive between 0.3729 and 0.4662 shares of Novanta common stock per contract, depending on the company’s average market price at that time.
The threshold appreciation price for each tangible equity unit is set at $134.0842, representing approximately a 25% premium over Novanta’s closing stock price on November 6, 2025. This pricing range incentivizes long-term investment while aligning with Novanta’s growth trajectory and expected market performance.
Details of the Amortizing Notes
Each tangible equity unit includes a senior amortizing note with an initial principal amount of $8.74, maturing in November 2028. These notes bear interest at a fixed annual rate of 6.30%. Investors will receive quarterly payments of $0.8125 per note, starting February 1, 2026, consisting of both interest and principal repayment. The first installment will be $0.7132 to adjust for the initial short period.
Over the life of the note, these regular quarterly payments will total 6.50% annually relative to each unit’s $50 stated value. Importantly, the notes are direct, unsecured, and unsubordinated obligations of Novanta, signaling the company’s commitment to maintaining transparency and priority repayment to its investors.
Use of Proceeds: Strengthening the Balance Sheet and Funding Growth
Novanta expects to generate net proceeds of approximately $533 million from the offering, or up to $613.2 million if the underwriters exercise their over-allotment option in full.
The company intends to deploy the capital to:
- Repay $317 million of existing debt under its revolving credit facility, improving its leverage profile.
- Support working capital requirements to sustain operations and enhance liquidity.
- Fund potential future acquisitions and strategic investments, consistent with Novanta’s growth strategy in medical and advanced industrial technologies.
- Finance capital expenditures, including innovation-driven projects that expand the company’s product portfolio.
- Facilitate share repurchases and other general corporate purposes, reflecting Novanta’s balanced approach to shareholder value creation.
By reducing debt and freeing up capacity on its credit line, Novanta is positioning itself for greater strategic flexibility, ensuring it can respond efficiently to emerging market opportunities and potential acquisition targets that align with its technology-driven portfolio.
Underwriters and Offering Management
Leading financial institutions are overseeing the offering, highlighting strong market confidence in Novanta’s fundamentals and governance.
- Joint Book-Running Managers: J.P. Morgan, BofA Securities, and Wells Fargo Securities.
- Co-Managers: PNC Capital Markets LLC, U.S. Bancorp, William Blair, Raymond James, First Citizens Capital Securities, and CJS Securities.
The offering is made pursuant to Novanta’s effective shelf registration statement on Form S-3 filed with the U.S. Securities and Exchange Commission (SEC). Investors can access the prospectus supplement and accompanying prospectus through the SEC website or by directly contacting the underwriting banks.
Strategic Context and Market Significance
This offering represents Novanta’s proactive approach to managing capital amid a dynamic market environment. By combining equity-linked features with fixed-income stability, tangible equity units attract both growth-oriented and income-focused investors.
For Novanta, the move comes at a time when the company continues to expand its footprint across high-growth sectors including medical technology, robotics, laser systems, and precision motion control. The capital raised is expected to fuel ongoing R&D initiatives, enhance manufacturing capabilities, and facilitate strategic M&A activity in advanced photonics and life science instrumentation.
The offering also reinforces Novanta’s prudent capital structure management. Lowering its debt burden through partial repayment of revolving credit facilities will improve its debt-to-equity ratio and reduce interest expenses. This creates room for future expansion while maintaining investment-grade discipline.
Investor Perspective and Financial Outlook
From an investor standpoint, tangible equity units offer a unique investment vehicle providing both regular cash flows and the potential for equity appreciation. With a fixed yield component and future share settlement, investors can benefit from Novanta’s long-term growth without immediate exposure to market volatility.
The offering also underscores management’s confidence in Novanta’s operational performance and prospects. The company’s robust financial track record, consistent revenue growth, and disciplined cost management make it an attractive issuer in the industrial and medtech technology space.
Moreover, the offering’s pricing — representing a modest yield relative to market conditions — indicates strong investor demand and a positive perception of Novanta’s creditworthiness and future earnings potential.
Legal and Regulatory Framework
The securities will be issued only through the official prospectus supplement and accompanying base prospectus, both filed with the SEC. The company emphasized that this announcement does not constitute an offer to sell or solicitation to buy securities in jurisdictions where such actions are unlawful.
Copies of the official documentation are available through:
- J.P. Morgan — Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717; Email: prospectus-eq_fi@jpmchase.com
- BofA Securities — NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255; Email: dg.prospectus_requests@bofa.com
Novanta cautioned investors that certain statements in this announcement are forward-looking under the Private Securities Litigation Reform Act of 1995. These statements, while based on management’s reasonable expectations, are subject to various risks and uncertainties that could cause actual results to differ materially.
Potential risks include:
- Inability to complete the offering within anticipated timelines.
- Market volatility affecting the pricing or trading performance of tangible equity units.
- Changes in economic or industry conditions that could impact Novanta’s growth or acquisition plans.
- Regulatory or competitive pressures influencing financial performance.
The company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, filed with the SEC, provide detailed disclosures of these and other risk factors.
Novanta reaffirmed its commitment to transparency and compliance, noting that it assumes no obligation to update forward-looking statements except as required by law.
About Novanta Inc.
Headquartered in Bedford, Massachusetts, Novanta Inc. designs, develops, and manufactures advanced photonics, vision, and precision motion technologies for OEMs in medical and industrial markets. Its technology portfolio includes laser scanning systems, optical components, barcode imaging solutions, and motion control subsystems used in applications such as robotic surgery, advanced diagnostics, and industrial automation.
Through continued innovation and strategic acquisitions, Novanta has established itself as a trusted technology partner to global leaders in healthcare and industrial automation. The company’s mission centers on enabling precision technology that improves productivity, performance, and lives around the world.
Source Link:https://www.businesswire.com/
