I sold all my BXLT shares before the exhange. SHPG may work out in the long term but am not interested in the whole Ireland based tax scheme company.
Each SHPG ADS represents 3 ordinary shares. If you are in the US, there will probably be a fee that is not deductible for most taxpayers. But if you get the London listed SHP shares, I expect your broker will charge a currency translation fee that is bigger than what the ADS bank charges.
Either way, expect income tax to be "withheld" at 20%. No small investor will get this refunded, though it will be partially or fully credited toward US taxes for many US taxpayers. If the shares are in an IRA, I think this tax is paid from the IRA. There are some countries that do not withhold income tax for US IRAs, I think Ireland still takes their 20%. This tax extraction is part of the motivation that Ireland gives the companies a good deal to attract them to move in from the US.
My info may be old, or maybe there are factors I don't understand.
Because they already got it wrong the first time, and I thought perhaps some intrepid soul would be able to figure out the right answer. But it sounds like this is not specific to Etrade.
Blake E. Devitt (Baxalta director) tendered 9231 shares of BAX. At the 3.6178959% proration rate, that would mean 333.967970529 shares would be converted, and I expected that either the conversion would be for the full amount with CIL for the extra 0.967970529 shares, or the number would be truncated to 333. He got 334 shares converted. Therefore I think the number was rounded.
Then the 334 shares would be converted to 387.1394 new BXLT shares. I presume that generates CIL on the 0.1394 shares. But I am not sure.
The shares of BXLT then converted to SHPG at the rate of 0.1482 SHPG plus $18 for each BXLT. This would be a second CIL. Is the CIL going to be somehow combined, or will there 2 separate CIL entries? Don't know. Have not seen any CIL yet.
Two corrections to my post:
1. It was blackoutbuzz that was describing the Shire event as probably fully taxable to the shareholders. Things often do play out has he described.
2. Only those BAX holders who tendered shares in search of the bonus had BAX shared converted to BXLT this year. The tender offer was oversubscribed due to a bonus, but I may regret taking that offer. The tax return effort and the tax itself may be worse than the bonus factor was good.
Trying to read the documents, I still am not sure. For BAX shareholders, there was an additional step. Some of their BAX shares were converted to Baxalta (BXLT). I think that step was tax free, except for any CIL. These Baxalta shares would have been added to the Baxalta spinoff shares that were distributed 1:1 June 1, 2015, which was tax free.
The Baxalta shares were converted to Shire (Ireland) shares plus cash.
Tax: I am still working on this. I think Samideis thinks that the Baxalta shares are all treated as having been sold, and some of the proceeds used to buy 0.1482 Shire shares for each BXLT share that was held. I had read stuff about tax rulings that make sure this was done in a non-taxable way, but maybe that was only with regard to what was taxable to Baxter and to Shire. I still have hope. Even though my broker seems to look at this as taxable, the accounting at the broker often has a delay before the actual reporting gets worked out. Ideally the Baxter or Shire will put a readable document on the website because making life easier for their investors is important to them.
Tax inversion deals that are fully taxable to the shareholders are common. I hope that Samideis is being pessimistic in this case.
Volume still below average but looks like some selling pressure has kicked in. It's to be expected that some of the BXLT shareholders will want to exit. The only question is how many.
I think you can use the RAI buyout of LO last yeas as a reference. Here's the relevant part. I hope it helps.
2) As a LO shareholder, what will I receive as a result of the acquisition?
For every LO share, holders will receive $50.50 in cash plus 0.2909 shares of RAI common stock.
Pursuant to the merger agreement, any resulting fractional shares of RAI common stock will also be
redeemed for cash at the rate of $72.2977.
6) What is the cost basis of my new shares of RAI?
The cost basis for RAI shares paid to LO shareholders receiving those shares as a result of the
transaction is $72.15 per share. This was the closing price of RAI shares on June 11, 2015, the last
trading day prior to the date the transaction was completed.
7) What is the tax treatment for the cash and shares I receive?
The transaction is considered a taxable event for LO shareholders. The following information is
provided only as an example and for reference. By providing this example, Reynolds American Inc. is
not providing legal and/or tax advice. As everyone’s situation is different, you should consult your
tax advisor to determine specifically how this transaction affects you.
This example assumes a LO shareholder held 100 shares of LO at the time of the merger on June 12,
2015. The total consideration received by the LO shareholder would be $7,148.86.
1) 100 shares of LO multiplied by$50.50 = $5,050.00 cash received
2) 100 shares of LO multiplied by 0.2909 shares of RAI = 29.09 shares of RAI received
a. 29 shares of RAI multiplied by $72.15 (closing price of RAI on 6/11/2015) = $2,092.35
b. 0.09 fractional shares of RAI multiplied by $72.2977 = $6.51 cash received
Total consideration received: $5,050.00 + $2092.35 + $6.51 = $7,148.86
Etrade messed up the cost basis for my holdings, but I'm not sure what they should be instead. Any help?
Bought 400 shares on 1/4/16 for total cost of $16,289.99 w/ commission
Received a cash dividend of $28 on 4/1/16
Received $7,200 cash, 59 SHPG shares on 6/3/16 and was charged a $20 fee. Theoretically I should also have received cash in lieu of the 0.28 fractional share, but I'm not seeing it anywhere.
SHPG was at $190.04 at conversion. I'm assuming I can't just use that price, right?
Thanks for your help
The new target price for SHPG was put out last Friday after the deal closed
@6/3/2016 Jefferies Group Boost Price Target Buy $223.00 - $262.00
SHP.L closed on the LSE at 4407 GBp today The new target price is ~37% higher. That corresponds to an ADR target price of ~260.
@Shire : *JEFFERIES RAISES SHIRE PRICE TARGET TO 6050 PENCE - 'BUY' 06/06/2016 | 03:00am EDT
Hmm... volume traded today is not even close to that of the few days preceding the merger. I wonder what fraction of float was held by arbs through the close of the deal? If they didn't buy back on the open market to close out their short SHPG leg of the trade, I assume that now they will simply transfer the shares received back to the MM who supplied them. And of course not all former BXLT shareholders (excluding arbs) will want to dispose of their new SHPG shares. So unless volume picks up in the next few days, there may not be any significant selling pressure. In that case the stock price should start to move up in short order.
Added today as i believe the coast is clear and the stock price will work its way the remaining part of the year to go higher,will stay long and enjoy the ride!
Analyst takes on the new SHPG.
@Jefferies analysts believe the combined company might deliver higher cost savings than planned, based on their discussions with sources close to the company. They also said Shire could strike additional, smaller deals and conduct share repurchases, alongside driving down debt accumulated through the Baxalta tie-up. The deal will also make Shire large enough to drive away potential takeover offers from larger companies, preventing a future AbbVie-type situation.
Credit Suisse analysts commented on the merger in a research note earlier this week, saying, “We publish our updated Shire Baxalta model ahead of the expected deal closing on June 3. We see 5% earnings per share accretion over our stand-alone Shire numbers by 2020. This assumes $500m of operational cost savings, $400m of incremental sales (adding $170m of operating earnings) and a combined group tax rate of 16.5% by 2020."
Duetsche Bank analysts dispelled many of the competitive concerns threatening Baxalta’s hemophilia business in a research note. “We believe investor focus on the threats to Baxalta’s haemophilia franchise mean that the transformational nature of the acquisition has been largely ignored. While we are cognisant of risks on the horizon from potentially paradigm-changing therapies, we believe worst-case investor fears over threats to this franchise are misplaced. Importantly, we see upside to the shares even in bear cases where Baxalta’s franchise sees considerable declines. With our base case forecasts suggesting Shire can deliver a 2016-20 earnings per share compound annual growth rate of more than 15% in return for just 13 times 2017 estimated PE, we reinstate our rating at Buy.”