CBS Exchange Offer with Odd-Lot Provision (~11%, $600 Upside)

  • Company: CBS Corp. 
  • Ticker: CBS, ETM
  • Market Cap: ~$23bn
  • Size of Action: up to ~$6bn
  • Type of Transaction: Exchange Offer with Odd-Lot Provision
  • Current Price: $56.41 (CBS), $11.00 (ETM)
  • Tender Price: $1.08 of ETM stock for every $1.00 of CBS stock tendered (subject to upper limit of 5.7466).
  • Potential Gain (%):  11%
  • Expiration: November 16, 2017
  • Tender Limit (Shares): 99
  • Max Investment ($): ~$5,500
  • Max Gain ($): ~$600
  • Link: Filing
  • Summary: CBS is offering to exchange up to 101.4mm shares of tendered CBS stock into ETM stock with an 8% premium. The transaction is similar to the PG/COTY, LMT/LDOS tender offers we have posted previously. Please note the final exchange ratio will not finalize until the expiration of the offer (valuation dates will be the 10th, 13th and 14th of November) meaning that it is not certain we will get a 8% return at this point in time.
  • UPDATE (11/14/17): CBS set the final exchange ratio to 5.6796. Based on where CBS and ETM currently trade, we can generate a 10.7% return.
  • Odd Lot Provision:  ...Beneficial holders (other than plan participants in the CBS Savings Plans) of odd-lots who validly tender all of their shares will not be subject to proration if the exchange offer is oversubscribed and if CBS completes the exchange offer (those who own less than 100 shares but do not tender all of their shares will be subject to proration).....
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