Dow Chemical (DOW) – Split Off Transaction – $460 expected return

Current Price – DOW $42.37, OLN $18.49;

Offer Price – $1.11 stock of OLN for $1 stock of DOW (subject to upper limit of 2.56 OLN shares per share of DOW);

Upside – 11% or $460 for Odd Lot holders;

Expiration date – October 1, 2015;

Odd Lot holders (less than 100 shares) are not subject to proration;

SEC Filling

 

How to profit from this opportunity:

Buy 99 DOW and sell short 254 OLN (ratios might change depending on the final exchange rate). Lock in gain of $460. Tender DOW for OLN. Cover short position after receiving the exchange shares.

Warning - final exchange ratio will be determined on the last 3 days before expiration of the offer, therefore final payoff/loss might differ from the indicated one and depending on how shares move in the meantime this transaction might even result in losses for investors. This deal is more risky than the standard odd lot tenders usually posted on this site. Do your own due diligence before investing.

The transaction is still subject to OLN shareholder approval - meeting is scheduled for 15th of December.

Summary:

The Transactions are being undertaken to transfer the Dow Chlorine Products Business from The DOW Chemical Co (TDCC) to Olin. Immediately following the consummation of this exchange offer, a special purpose merger subsidiary of Olin named Blue Cube Acquisition Corp. (“Merger Sub”) will be merged with and into Splitco, and Splitco, as the surviving company, will become a wholly-owned subsidiary of Olin (the “Merger”). In the Merger, each issued and outstanding share of Splitco common stock will be converted into the right to receive 0.87482759 shares of Olin common stock.

This exchange offer is designed to permit you to exchange your shares of TDCC common stock for shares of Splitco common stock at a 10 percent discount, calculated as set forth in this document, to the per-share equivalent value of Splitco common stock. Stated another way, for each $1.00 of your TDCC common stock accepted in this exchange offer, you will receive approximately $1.11 of Splitco common stock. The value of the TDCC common stock will be based on the calculated per-share value for the TDCC common stock on the NYSE and the value of the Splitco common stock will be based on the calculated per-share value for Olin common stock on the NYSE multiplied by 0.87482759 (which is the number of shares of Olin common stock to be received for each share of Splitco common stock), in each case determined by reference to the simple arithmetic average of the daily VWAP on each of the Valuation Dates. Please note, however, that the number of shares you can receive is subject to an upper limit of an aggregate of 2.9318 shares of Splitco common stock for each share of TDCC common stock accepted in this exchange offer. The next question and answer below describes how this limit may impact the value you receive. This exchange offer does not provide for a lower limit or minimum exchange ratio. See “This Exchange Offer—Terms of this Exchange Offer.” Because this exchange offer is subject to proration in the event of oversubscription, TDCC may accept for exchange only a portion of the shares of TDCC common stock tendered by you.

 

No proration for Odd Lot holders:

Beneficial holders of “odd-lots,” that is, fewer than 100 shares of TDCC common stock, who validly tender all of their shares and request preferential treatment will not be subject to proration if this exchange offer is oversubscribed.