WebMD Health Corp (WBMD) – Tender Offer (expected Odd Lot) – 2.7% upside

Current Price – $53.56

Offer Price – $55

Upside – 2.7% or $140

Expiration date – TBD (likely mid Dec 2016)

Press release

 

Summary

WebMD Health Corp. announced yesterday that it intends to commence a tender offer within the next week to purchase up to 2,000,000 shares of its common stock at a price per share of $55.00. The number of shares proposed to be purchased in the tender offer represents approximately 5.1% of WebMD’s currently outstanding common shares (including outstanding shares of unvested restricted stock). The NASDAQ Official Closing Price of WebMD’s common stock on November 11, 2016 was $53.38 per share. WebMD has approximately $1.065 billion in cash and investments, a portion of which will be used to fund the tender offer.

Odd Lot priority?

So far the press release does not mention anything about odd lots, but WebMD has carried out tenders before, and all of them had odd lot priority.

  • 2014 Aug – 2m shares at $48.5/share, odd lot priority, 4.9m shares tendered, proration factor 39%
  • 2013 Aug – 5m shares at $34/share, odd lot priority, 28m shares tendered, proration factor 17%
  • 2012 Mar – 5.8m shares at $24.5-$26/share, odd lot priority, 18m shares tendered, proration factor 32%
  • 2010 Aug – 3m shares at $52/share, odd lot priority, 14m shares tendered, proration factor 21%

WebMD tenders are always heavily oversubscribed and without odd lot priority there is hardly any upside in this. However, as all the previous tenders had odd lot priority, I would expect the same for this one – resulting in $140 of guaranteed risk-free profits.

9 COMMENTS

    1. dt

      why should shares increase? tender was already announced before and the only really new information now is confirmation of odd lot and expiration date.

    1. dt

      Yes, this has ended yesterday. I do not see any reasons why it should not work out as plenty of similar offers have worked out previously. In one week cash should be back in the accounts.

  1. Daniel Trynoski

    It seemed like this one had quite a bit of attention on SA which may be why so many participated as odd-lots.

    1. dt

      All of odd-lots lately get a lot of attention – just a natural cycle of hidden opportunities that are becoming more and more known.

  2. inquisitive

    I don’t understand the ” $140 ” upside. What is this with respect to the sell price of the stock?

    1. dt

      it was with respect to cash tender offer. Guaranteed sell for $150/share at the time of purchase. Risk free profits.

Comments are closed.