Current Price –$81.68
Offer Price – $88.63
Upside – 8.5% or $690 for Odd Lot holders
Expiration date – 25th of September, 2018
This is a rather standard split-off transaction of which I have already posted quite a few. The most recent ones were CBS/ETM, PG/COTY and LMT/LDOS. I recommend reading through those and examining share price behavior during and after the tender to familiarize yourselves with risks involved in this kind of transaction.
In summary, each $100 of FTV stock accepted in the tender will be converted into $108.7 of AIMC stock subject to the upper limit of 2.32 shares of AIMC per FTV share. Tender dates have not been set yet.
Important items to consider:
- Final exchange ratio will be determined close to the expiration of the offer (dates have not been set yet), 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. Right before the expiration the exchange ratio will already be known, so one might wait till then for the trade (however the upside in the trade might be gone by then).
- Transaction is subject to upper limit of 2.3203 AIMC shares per share of FTV. At current prices the exchange ratio is at the upper limit. If the spread widens (i.e. FTV gets more expensive and AIMC gets cheaper) during valuation dates, the final pay-off will be less than 8.5%.
- At the moment there are AIMC shares to borrow for hedging the to-be-received AIMC position, but this borrow might dry up and borrow rates might shoot up higher as happened in number of previous cases. Approximately 54% of post split-off AIMC stock will be held by current FTV shareholders so after the tender there will likely be quite a bit of selling pressure.
- Less than 5% of the FTV shares will be exchanged in the split-off, thus FTV market price is unlikely to be effected much by this arbitrage situation and proration is likely to be high.
- Tender is subject to AIMC shareholder approval.
- Tender and valuations dates have not been set yet.
This Exchange Offer is designed to permit you to exchange your shares of Fortive common stock for shares of Newco common stock at a price per share equal to an 8% discount to the per-share value of Altra common stock, calculated as set forth in this prospectus. Stated another way, for each $100 of your Fortive common stock accepted in this Exchange Offer, you will receive approximately $108.70 of Newco common stock. The value of the Fortive common stock will be based on the calculated per-share value for the Fortive common stock on the NYSE and the value of the Newco common stock will be based on the calculated per-share value for Altra common stock on Nasdaq, in each case determined by reference to the simple arithmetic average of the daily VWAP on each of the Valuation Dates. The number of shares you can receive is subject to an upper limit of 2.3203 shares of Newco common stock for each share of Fortive common stock accepted in this Exchange Offer. The next question and answer below describes how this limit may impact the value you receive.
No proration for Odd Lot holders:
An exception to proration can apply to stockholders (other than participants in the Fortive Stock Fund through either of the Fortive Savings Plans) who beneficially own “odd-lots,” that is, fewer than 100 shares of Fortive common stock. Such beneficial holders of Fortive common stock who validly tender all of their shares will not be subject to proration.