On September 6, 2013, the Board of Directors established a Distribution ratio for the spin off of one FTD share for every five United Online shares owned on the record date of the Distribution and a Reverse Stock Split ratio of one United Online share for every seven United Online shares held as of the effective date of the Reverse Stock Split. The Reverse Stock Split is expected to be implemented immediately prior to the Distribution and will result in the number of shares of the Company's outstanding common stock being reduced proportionately based on the one-for-seven ratio. The date of the Distribution, which the Company is currently targeting to occur on October 1, 2013, and the record date for the Distribution will be determined and disclosed at a later time.
So, assuming a simple 1000 shares...that would present the owner with 200 shares of FTD (Value kind of unknown) followed by a reverse split of the remaining UNTD (7:1) leaving the owner with a mere 142 shares of the "New" UNTD. The sum total of the two transactions should be close to the value of UNTD stock the day prior.
That looks right. As I was reading your post it got me thinking that we could see FTD going towards $30 and UNTD going towards $1. Not sure though. 1000 shares today is about $8k. If $7k of the value (a guess) is in FTD then you end up with 1200 shares total before the reverse split. 200 FTD shares are then worth $7K. The 1000 UNTD shares are worth $1K, so $35/share for FTD and $1/share for UNTD then the 7- 1 reverse gets UNTD back up to $7/share and it can still be held by most of the funds that hold it today.
This analysis is complete garbage and barely suitable for a message board, it's just how my brain interpreted your numbers. I guess it will all play out very soon, so we'll see.
I almost have to laugh and morbid fascination will have me hold my shares to see what's left. The only two quibbles I can have with your weighty and thorough analysis are...
1. Present valuation of FTD. I can only hope it's not $7k! But I'm kind of afraid you're pretty close.
2. Who keeps the present generous dividend? in other words, who generates all that free cash? Pretty sure it's mostly FTD.
Yeah, it's definiely a 2 beers and a calculator moment. I fully intend to hold through the spinoff. After that? Probably dumping UNTD in favor of holding FTD and taking my now very small UNTD windfall elsewhere.