Current Price – $53.56
Offer Price – $55
Upside – 2.7% or $140
Expiration date – TBD (likely mid Dec 2016)
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.