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iShares Mortgage Real Estate Capped Message Board

  • toyotatex toyotatex Feb 7, 2006 10:05 PM Flag


    Under the conditions of the merger in which REM holders will recieve $27 in cash and .436 of CDIS stock for each REM issue, what if that amounts to an uneven amount say 10.46 shares of CDIS stock? Would the .46 be converted to cash and paid along with the $27 per share?

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    • << Would the .46 be converted to cash and paid along with the $27 per share? >>

      The above comment implies that the REM shareholders will get $27 in cash. Since this is a tax-free exchange, I don't think that is the case. Here is how I think it would work:

      Let's say I have 100 shares of REM stock, and let's say that on the date of the merger CDIS stock is trading at $45.00. This means that I will get 103 shares of CDIS stock, and will receive $27 in cash.

      This is how I arrive at that number.

      Is that correct?

    • Right out of the merger agreement

      (e) Treatment of Fractional Shares. No Parent Certificates or scrip representing fractional shares of Parent Common Stock shall be issued in the Merger and, except as provided in this Section 2.6(e), no dividend or other distribution, stock split or interest shall relate to any such fractional share, and such fractional share shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent. In lieu of any fractional share of Parent Common Stock to which a holder of Company Common Stock would otherwise be entitled (after taking into account all Company Certificates delivered by or on behalf of such holder), such holder, upon surrender of a Company Certificate as described in this Section 2.6, shall be paid an amount in cash (without interest) determined by multiplying (i) the Market Price by (ii) the fraction of a share of Parent Common Stock to which such holder would in addition otherwise be entitled, in which case Parent shall make available to the Exchange Agent, to any other cash being provided to the Exchange Agent pursuant to Section 2.6(a), the amount of cash necessary to make such payments. The parties acknowledge that payment of cash consideration in lieu of issuing fractional shares of Parent Consideration was not separately bargained for consideration but represents merely a mechanical rounding off for purposes of simplifying the problems that would otherwise be caused by the issuance of fractional shares of Parent Common Stock.

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