BMY-MJN Tender Results

Discussion in 'Trading' started by livevol_ophir, Dec 18, 2009.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    An update to the previous post.
    (http://livevol.blogspot.com/2009/12/bristol-myers-bmy-mead-johnson-mjn.html)

    Preliminary Results
    NB: There is a three day protect so we will not know for certain until then.

    500,547,697 shares of BMY ended up being tendered (out of a total possible of 2 billion shares).

    Since a total of 270 million were able to be tendered and converted to MJN (see earlier blog for details) the conversion ended up being: 270/500.5 = 54%.

    Recall we knew that at least 13.5% would be converted - though that lower bound was unrealistic for a number of reasons (again, I direct the reader to the original blog).

    Here's how the math worked out:

    Version 1: If we guessed everyone would tender
    Bought 100 shares BMY for 25.68 (the price as of the first blog).
    Sold 14 shares MJN @ 42.49 (the price as of the first blog).

    To clean up: Sell your net 20 shares MJN and sell your net 46 shares BMY. Done.

    Final Pnl:
    $9.66 (long BMY) + $12.46 (short MJN) + $27.68 (converted shares) = $49.80
    Or, $49.80/114 = $0.44 per share.


    Version 2: If we guessed a 50% conversion rate
    Bought 100 shares BMY for 25.68 (the price as of the first blog).
    Sold 50 shares MJN @ 42.49 (the price as of the first blog).

    To clean up: Buy your net short 16 shares MJN and sell your net 46 shares BMY.

    Final Pnl:
    $9.66 (long BMY) + $44.50(short MJN) + $27.68 (converted shares) = $81.84
    Or, $81.84/150 = $0.55 per share.

    Updated blog details:
    http://livevol.blogspot.com/2009/12/update-bristol-myers-bmy-mead-johnson.html