Current price: $156
Tender Price: $144 – $162
Upside: 4% or $600 (if priced at the upper limit)
Expiration Date: 15 of August, 2019
Very similar situation to DaVita from transactional perspective.
ADS ($8bn market cap) announced dutch tender with odd-lot provision to repurchase 9%-10% of the company at $144-$162/share. Currently ADS trades in the upper part of the tender range. Management owns 2.3% of the stock and will not tender. The company will have another $0.35bn remaining under buyback authorization after the current offer expires.
The offer was announced simultaneously with Q2 results which were somewhat below expectations but included improved EPS guidance driven by partial-year benefit of anticipated share repurchases (including current tender) and cost reductions. Revenue guidance was unchanged.
Pre-announcement price stands at $150/share.
As with DaVita, I have no opinion on the likelihood of upper limit pricing on this one.
https://www.alliancedata.com/news/press-releases/press-release-details/2019/Alliance-Data-Announces-Preliminary-Results-of-Modified-Dutch-Auction-Tender-Offer-Including-Proration/default.aspx
$148 tender price. Does it strike anyone else as odd that it turned out so low? Especially because anyone tendering could have liquidated at $158 a week ago?
13.5 m shares were tendered, only 5.1m taken at the cutoff price of $148. $158 was more than 2 weeks ago, it’s more like in the low $150’s during the last 2 weeks. Usually, the daily volume is less than a million shares, so big players eager to sell 13.5m shares have to accept a few % discount. In fact, they are eager to sell all the way down to $138 last Friday after the tender results were released!
Of course, I only know about these eager sellers using hindsight.
DVA also just priced below recent trading levels. ($56.50)
The macro environment deteriorated during the tender period and volatility jumped causing many investors to cut and run. These odd lot tenders can work well in stable, upward moving markets, but unstable markets can bring unexpected outcomes.