so how many mistakes have the BMY management made over the past yrs? all of these fools who think BMY is still a takeover candidate MRK, PFE have all passed on it. now they think they can remake themselves into a new co i highly doubt they have what it takes. im glad im getting rid of this and getting a better stable co.
That's a good point on the savings of the reduced amount of shares they pay on the dividend. Good for BMY shareholders if you keep it.
From BMY perspective, I'm sure that weighed in the decision, though I think the bottom line is they want to be a drug/bio company.
All said and from what I can tell, I'm thinking the best move is to hold on to my BMY and let MJN do their own thing. I very well may be wrong and like Just think there is more upside potential and like garce said, there's something to be learned here.
For BMY it's tax avoidence and a buy back of shares thru the exchange.
Lets assume that years ago they bought Mead for 1 bil $ and it's now worth 8 bil $. That's a 7 bil taxable capital gain. The same thing would exist if they sold it to another company. By doing the swap they avoid the tax and gain back, 170,000,000 shares of BMY that today are worth approx. 4.1 bil $ and which reduces the div pay out by 211 mil$/yr.
How the ARBs/hedge funds play this will be interesting to see as in my opinion it's not an easy profitible hedge.
I think that he/she did just that ...
this thing is murky to me, I decided to just watch and
learn , because someday, I will own some other company that
will structure a similar deal. There is some reason WHY this
deal is structured this way ,it should be assumed that somebody
benefits, I need to learn, so that I can lever the next opp.
For every $1.00 of BMY stock you exchange, you get up to $1.11 of MJN stock, so an instantaneous 11% yield isn't bad. The BMY dividend rate is 4.9% while the PE ratio is about 13. For MJN, PE ratio is 21.7 while dividend yield is 1.82%. MJN competes primarily in infant formulas around the world. My take is if you are going to take your money out of the stock market in the next 12 months, try to exchange BMY for MJN to capialize on the 11% premium. If you will be in longer, the BMY PE ratio and dividend rate seem to be calling.
Thanks for all the informed posts; appreciate it. I am a simple guy and my take is simple: There is no easy way to make any profit out of any short-term trades. To trade or not to trade comes down to which company you prefer to own. I am sticking with BMY for reasons already stated in other posts. Good luck and stay healthy.
who knows ??? this is quite and advance move and pretty
limited to the real pros , who don't visit message boards
to help us .....
I'm hoping that I can learn from this experience because
I will probably see others sometime in the future .
MJN has lots of room to grow and a small understanding number
of shares. They are in a very mature part of pharma business
and that sector of pharma will evolve to a near commodity
status. The real growth is in discovering new drugs that
will have some minimum number of people who need it.
Concurring cancer , for one, represents an area of huge
growth potential. MJN appears to be similar to a company
called Frontier(telecom) .. Frontier has a large, old ,
landline business and is buying a huge chunk of landlines
from VZ .. VZ will continue to do battle in the wireless
and fiber cable arenas, big risks, big rewards, BMY is
following the same route,as are other drug companies and
the field of the more mundane will eventually consolidate to
a few players and they will do well ...... MJN could be
a good bet, BMY is still a few years away from realizing
big returns from bio/onco sectors,which is why the Mederex
deal was so large ... they will have cash flow and a
pipeline to help bridge the transition , but which company
to stay with or buy into ???? only time will tell, but
it could be a very good strategy to hold both as they
are apples and oranges to each other ... later ... garce