Danaher (DHR) split-off is a tremendous opportunity ($600 gain)

  • Company: Danaher
  • Ticker: DHR
  • Market Cap: $61Bn
  • Size of Action: variable
  • Type of Transaction: split-off with odd-lot provision
  • Current Price: $85.93
  • Exchange Price: NA
  • Potential Gain (%): 7-10% discount (based on exchange ratio)
  • Expiration: Midnight July 8, 2015
  • Tender Limit (Shares): 99
  • Max Investment ($): $8,500
  • Max Gain ($): $850
  • Sec Filing: Prospectus Download Link , Danaher Website with PR and exchange ratio (updated daily)
  • Summary: Danaher (DHR) will split-off its communications business (Potomac Holding LLC) and then immediately merge it with NetScout. In order to encourage investors to take split-off shares, Danaher will offer a discount rate to investors who decide to accept the exchange offer for split-off shares. The final exchange ratio will depend on the volume weighted average stock price (VWAP) between DHR and NetScout on July 6/7/8. The discount will be between 7 to 10%. In all likelihood, we expect the transaction to be completed at the bottom of the range (7%). An odd-lot provision is in effect (99 shares or less). With an $8,500 investment and a 7% discount rate, one would expect to make ~$600 per account. Post the transaction, an investor would have to sell their shares to lock in the arbitrage profit. The earlier the better as there could be some selling pressure. In conclusion, this may represent one of the best opportunities this year and I recommend everyone to take advantage.
  • Odd Lots: ...Except as otherwise provided in this section, beneficial holders (other than plan participants in the Danaher Corporation & Subsidiaries Savings Plan, the Danaher Corporation & Subsidiaries Retirement & Savings Plan or the Danaher Corporation & Subsidiaries Puerto Rico Savings Plan) of fewer than 100 shares of Danaher common stock who validly tender all of their shares will not be subject to proration if this exchange offer is oversubscribed. Beneficial holders of 100 or more shares of Danaher common stock are not eligible for this preference...
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