H&R Block (HRB) – Odd Lot Tender Offer – $150 potential upside

Current Price – $35.42;

Offer Price – $32.25 – $37;

Upside – $150 or 4.5% (if the upper pricing limit is used);

Expiration date –  2 October 2015;

No proration for odd lot holders;

SEC Filling

 

Summary:

H&R Block invites its shareholders to tender some or all of their Shares for purchase by us pursuant to the Offer. Upon the terms and subject to the conditions set forth in this Offer to Purchase and the Letter of Transmittal, we are offering to purchase Shares pursuant to (i) Auction Tenders at prices specified by the tendering shareholders of not less than $32.25 and not greater than $37.00 per Share or (ii) Purchase Price Tenders. We are offering to purchase Shares having an aggregate purchase price of up to $1,500,000,000. As of August 31, 2015, the business day preceding the date on which we announced our intention to make the Offer, we had 276,359,906 issued and outstanding Shares. At the maximum Purchase Price of $37.00 per Share, we would purchase 40,540,541 Shares if the Offer is fully subscribed, which would represent approximately 14.7% of our issued and outstanding Shares as of August 31, 2015. At the minimum Purchase Price of $32.25 per Share, we would purchase 46,511,628 Shares if the Offer is fully subscribed, which would represent approximately 16.8% of our issued and outstanding Shares as of August 31, 2015.

 

No proration for Odd Lot holders:

If you own, beneficially or of record, fewer than an aggregate of 100 shares, you properly tender all of such shares at or below the Purchase Price prior to the Expiration Date (and do not properly withdraw such shares) and you complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, and all conditions to the tender offer are satisfied or waived, we will purchase all of your shares without subjecting them to proration.

 

Source of Funds:

The maximum aggregate purchase price for the Shares purchased in the Offer will be $1,500,000,000, unless the Offer is amended. We expect to fund the purchase of Shares in the Offer with a combination of available cash, borrowings under the 2015 Credit Facility (as defined below) that Block Financial intends to enter

into prior to the consummation of the Offer (and that will be guaranteed by the Company) and/or proceeds of any incremental debt Block Financial may issue prior to the consummation of the Offer. The Offer is subject to satisfaction or waiver of the Financing Condition. This means that if we are not able to satisfy the Financing Condition, we will not be required to close the Offer. Proceeds from the borrowings under the 2015 Credit Facility are expected to be available at least five business days prior to the Expiration Time.

Block Financial is a party to a five-year, $1.5 billion unsecured committed line of credit governed by a Credit and Guarantee Agreement, dated as of August 17, 2012 (the “2012 Credit Facility”). We expect that prior to the consummation of the Offer, Block Financial will enter into a new credit agreement (the “2015 Credit Facility”) that will replace the 2012 Credit Facility. The 2015 Credit Facility amount and terms will be determined based upon market conditions at the time of the closing of the 2015 Credit Facility. If the Financing Condition is satisfied or waived, we will promptly disclose this information and extend the Offer to the extent required by Rule 13e-4 under the Exchange Act.