Current Price: $24.33
Upside: $217-$469 for odd-lots
Expiration date: 12th of February
This idea was shared by Martin.
XBIT is a British Columbia biotech company that trades on NASDAQ in US dollars. On the 14th of January they've announced $420m dutch tender offer with odd-lot provision for 30-33% of outstanding shares at $30-$33/share. Despite large size of the offer, it comes at significant premium to pre-announcement levels (61%) and an all time high for the XBIT. It is expected that the tender will be oversubscribed and priced at a lower limit.
Aside from likely oversubscription, tax treatment is also a potential issue. According to Canadian rules shareholders will be deemed to receive a taxable dividend equal to the difference between the offer price ($30-$33/share) and paid-up capital (estimated to be $6.82/share). At the 15% withholding tax rate US holders should end up paying $3.48-$3.93/share of withholding taxes, meaning the actual post-tax consideration is $26.52-$29.07. This is still a meaningful 9%-19% upside (or $217-$469 for odd lots) from the current price.
There might be no withholding tax for US IRA etc. accounts, but I do have definitive information on this.
Management owns 38.5% (16m) of the outstanding shares and may tender (final decision is not made yet) up to 2/3rds of it (11m shares). Other major holders (Rennes Fondation - 12%, Thomas Gut - 8%, Josef Gut - 7%) have owned shares for several years already and sit on significant profits (maybe except Thomas Gut, who acquired a majority of his stake at around $26/share).
The offer will be funded by the proceeds received from the recent sale ($750m) of company's investigational True Human antibody Bermekimab that is currently in Phase 2 trials.