General Electric (GE) – Split-off transaction – $216 expected return (potential for $600 return)

Current Price – GE $29.03, SYF $31.32;

Offer Price – $1.0753 stock of SYF for $1 stock of GE (subject to upper limit of 1.1308 SYF shares per share of GE);

Upside – 7.5% or $216 for Odd Lot holders (if price differential increases towards upper limit - as happened with other recent split-off transactions - the return will be c. $600);

Expiration date – November 16, 2015;

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

SEC Filling

 

How to profit from this opportunity:

Buy 99 GE and sell short 99 SYF (ratios might change depending on the final exchange rate). Lock in gain of $216. Tender GE for SYF. 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.

Summary:

GE is pursuing the exchange offer of its remaining interest in Synchrony consisting of 705,270,833 shares of Synchrony common stock, which represents approximately 84.6% of the outstanding common stock of Synchrony. Following the exchange offer, Synchrony will be wholly independent from GE, except that certain agreements between GE and Synchrony will remain in place.

General Electric Company is offering to exchange up to 705,270,833 shares of common stock of Synchrony Financial in the aggregate for outstanding shares of common stock of GE that are validly tendered and not validly withdrawn. For each $100 of GE common stock accepted in the exchange offer, you will receive approximately $107.53 of Synchrony common stock, subject to an upper limit of 1.1308 shares of Synchrony common stock per share of GE common stock. The exchange offer does not provide for a lower limit or minimum exchange ratio. The average value of the two stocks will be determined by reference to the simple arithmetic average of the daily volume-weighted average prices of GE common stock  and Synchrony common stock during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which are currently expected to be November 10, 11 and 12, 2015.

 

No proration for Odd Lot holders:

Beneficial holders of less than 100 shares of GE common stock who validly tender all of their shares may elect not to be subject to proration