Below is a copy and paste that I found online through streetinsider but confirmed on other sites. Basically the proration factor is 31.2870888% and you will be able to exchange this percent of your shares submitted for SYF shares. You will also get 1.0505 shares of SYF for each GE share accepted above.
Doing the math, for 1000 shares submitted, you will be allowed to exchange 312.870888 shares (probably rounded down to 312 or to the nearest share). Then for those shares you will get about 327 shares (rounded down). They also previously stated that you will be compensated for any fractional shares lost due to rounding.
It also looks like the exchang should show up in our account on Monday Nov 23.
copy/paste info below...
Based on the final count by the exchange agent, Computershare Trust Company, N.A., the final results of the exchange offer are as follows:
31.2870888% of the tendered shares of GE common stock subject to proration exchanged
Shares tendered that were subject to proration: 2,143,371,163
Odd-lot shares tendered that were not subject to proration: 768,324
Total number of shares of GE common stock accepted: 671,366,809
The exchange agent is expected to deliver shares of Synchrony common stock as follows: (1) with respect to shares tendered through the Depository Trust Company (DTC), to the account of DTC on Monday, November 23, 2015, and (2) with respect to shares tendered outside DTC, to the direct registered accounts of the respective holders by November 30, 2015. The exchange agent will mail checks in lieu of fractional shares of Synchrony common stock to tendering holders with fractional interests after the exchange agent has aggregated all fractional shares and sold them in the open market. Shares of GE common stock tendered but not accepted for exchange will be returned to tendering shareholders in book-entry form.
Not sure 2015 numbers have syf included. Yours mentioned above are 2014 and used for comparison purpose. With decrease in quarterly earnings recently, I think syf is not included in current numbers.
I thought that when SYF was initially spun off that earnings were separate at the point but GE still held 85 percent of SYF shares (now being exchanged). Am I mistaken?
I have been watching both GE and SYF since the exchange announcement and noticed that GE went up and SYF down right after the announcement. However, once the actual ratios were announced and now with the percentages that were submitted, GE has gone down a bit, but SYF has recovered nicely.
Now about my gut feeling, I don't know if it is true, but I thing the explanation for the above was that investors, and especially larger ones and funds, wanted to maximize their profit by taking the exchange, then selling SYF short and buying more GE back to keep their initial position. The problem was that they did not know the final numbers. Since the price of SYF has recovered since the announcement, I think these large investors overdid their hedges and now have to reverse some of their initial trades resulting in the prices we are seeing.
By December, the exchange will be behind us and prices should normalize to the truer market value.
I personally believe both companies will be good in the long term. I expect SYF to announce a dividend within 6 months, but probably small to begin with. I also expect GE to increase theirs a few cents. They both should then result in higher prices.
I personally offered all my shares for exchange. I plan to keep my SYF shares and may buy back my exchanged GE if it drops a couple points. I think GE has run a bit too much based on the expected 6.6 pct drop in shares outstanding.
actually we do not know the percentage of shares that will be accepted because anyone who submitted 100 shares or less will get a full exchange. Those of us who submitted more will get the ratio after those small shareholders are subtracted out. Therefore we cannot even assume we will have 31 percent of our shares accepted for exchange, probably a couple percent lower than 31.
my latest ideas are now to accept the swap since the price is close between GE and SYF. I believe that since you will get 1.07 SYF for each GE (maybe lower if the price of GE drops and SYF goes up), but I still think this is good. I am guessing the arbitrage traders are buying GE and selling SYF in anticipation of the exchange so as to lock in profits. Since the spread has narrowed quite a bit, I think most of the arbitrage is now done. I myself have offered for tender all my shares. I have no information, but am thinking that a high percentage of owners will tender their shares with perhaps 1/4-1/5 of the shareholders declining. This should mean that around 1 share in 7-9 will be accepted for the exchange. I also plan to hold any shares I get in the trade as I believe SYF is undervalued below 32.
I agree to buy under 37, but I also do not believe we get there. charts show strong support around today;s low of 38.19. We have already had a big drop from 43.45 to current levels. For a utility, a drop of over 10 pct is big. I also expect that the dividend will again be increased with the first dividend of 2016.
The recent drop has to do with the expected Fed rate increase as you noted. However, the fed will probably raise the rate and then go into wait and see mode for several meetings and may be one and done through 2016. One reason want to increase has to do with money market funds. With zero interest rates, these funds have fixed costs which exceed their meager payouts and they don't have incoming interest due to the zero rates.
Also, the dollar is very strong and any rate increase will make it stronger. This is bad for the economy and will temper any future increases.
The biggest caveat to my reasoning above is inflation. If it moves higher, then I will be wrong and rates will rise more. I don't expect this though because of the very strong dollar and low oil.
Good luck to all.
It is a hard decision and I will tell you what I think. But remember, I am not a professional and only do this for my own accounts. However, I try to research what I can, but even there I cannot find reputable advice.
Based on my gut, I decided to take the full swap and think it is an OK deal. Since GE got a bump when the offer was announced and SYF fell some, I think some of the shift in prices has already occurred.
Therefore, I don't think GE will rise the full 7 pct after the swap. Also, I get a discount on SYF for my GE. Not_totally_Gray also has a point, but I am not so sure, but this also supports less of a rise in GE.
However, as a hedge for price, I also own some SYF and I sold a covered call on these shares for .85 for the Nov 32 call which expires just before the offer does. I also don't expect all my GE shares to be taken, but more of the order of between 8:1 and 10:1 depending on how many swaps are accepted.
I am positive on both companies long term, but short term I want to see some profit.
I appreciate the input on this topic from everyone that has posted.
I just got mailing from my broker it states the final ratios are expected to be released 9am Nov 13, so I don't think SYF will get back to you with any specific information.
Reading the mailing, I interpret the swap to work so that you will get $107.53 in SYF value for every 100 dollars in GE value. When you do the calculation, it comes out to 1 SYF for 1 GE approximately give or take a very small fraction. If more than 705+ million of GE shares are offered for the swap then a ratio will be taken of the offered shares versus the 705+ million shares available. In another words, if 7.5 billion are offered, the GE would only allow you to swap 10 percent of your offered shares for the swap. In another words, If the swap is 1 GE for 1 SYF, and if you have 1000 shares of GE offered for the sway, then you would get 100 shares of SYF and end up with 900 GE. Also, no fraction shares will be issued and cash will be paid for fractional shares.
Good points not_totally_gray and slicky007, especially the fact that without SYF ownership, GE has less tangible value. However, earnings would still be the same as with SYF since these are not included in the earnings calculations. The P/E would still go down as the amount of shares used for calculation goes down.
I personally own both GE and SYF and like both companies. However, just to be safe, I took some SYF off the table and did enough to get the shares I sold back in the swap. I feel that I am in a win-win position this way since if GE and SYF go up, I make money on my GE, if they go down, I get my SYF shares at a much lower price than I sold. I may not make maximum profit this way, but I do lock in some profit.
I also expect that I will be able to get 1 share exchanged for every 10 that I own. I came up with the 10 to 1 figure assuming most but not all GE shares will be offered for exchange. I also expect there to be 1 GE for 1 SYF as the stock difference seems to be holding close to 7 percent.
if it is the shorts, eventually they will go elsewhere. I would like to see a dividend by SYF, but won't they need Fed approval for that? Good luck with your position.
Sentiment: Strong Buy
Without any new news, GE is up significantly and SYF down recently (even on an up day like today). It looks like the market is getting ready for the swap and setting the prices accordingly. With the share exchange of 7 percent based on price, I would expect GE to go up and SYF to fall with SYF falling due to the increased float after tender, although shares outstanding remain the same. In time, SYF should recover and again be based on fundamentals.
I previously had stated in another message that I plan to only tender part of my shares, but with what the market is doing, I am leaning more to taking full advantage of the swap.
I personally like both companies for long term growth, but short term, the swap is an overhang on SYF.
Just some musings...but...
In the past, it seems that GE was only interested in GE. It just wants to get rid of SYF and freeing themselves from the capital regulations in place. They want to do this without devaluing GE and this seems the only way they could do that.
Since SYF was too big to sell off like they did their other businesses, they wanted all the benefit to go to their own corporation. Also, since SYF is around 7 pct more than GE and the swap should be close to 1:1, I think SYF will fall and GE rise right after the swap as those that want GE will sell their newly acquired SYF shares and buying back GE for a quick profit.
Granted, not all shares will be traded this way. I may be jaded but the smaller trader will just miss out and lose their profit. This is since we wont be nimble enough to accomplish this trade in a timely fashion like the larger traders can.
After the first day of "ex dividend" or whatever it is called after the swap, I expect GE and SYF to be close in price per share.
I am thinking the same way, if I do commit some shares, it will only be a fraction of what I have, in that way I will be hedging my options.
I am posting here since the GE board seems to be down.
Not much has been discussed about the swap and its implications
This swap offered by GE is by no means a no brainer and is quite complicated when you dig into it. GE shareholders are not given a gift by management.
I am not an expert, but here is t the way I interpret the swap. You get SYF based on value of GE and SYF shares from Nov 12-14. The swap for SYF is at a value of 7 percent above the GE value. This is then compared to the value of each SYF share and a ratio is calculated. In another words if GE is valued at 29 then the GE value base is 31.03 (29*1.07). If SYF is at 31,then you would get 1 SYF share for each GE share accepted for tender. If SYF is more the 31 then you will get less than 1 share of SYF and if it is less than 31, you would get more than 1 share. Complicated.
If all the shares of GE are tendered for the swap, then GE would put a cap on how many shares you can swap. They would then create a percentage of the shares offered so that the GE shares shares offered would be an equal amount to the SYF shares to be exchange. For example, if you get 1 SYF for 1 GE and if there are 10 times the GE shares tendered vs the amount of SYF shares available, then they will only swap 1 share of 10 for the shares offered.
It also gets more complicated to make your decision. The reason is that with the swap, GE should go up 7 percent since 7 percent of GE stock would get retired. Therefore, as I mentioned in a previous Topic, Is it better to have GE or take the swap?
I figure all things are equal with the swap and there is no advantage as to whether you take the swap or not.
(7 percent expected increase in GE shares vs the 7 percent value increase you obtain with SYF).
There is one more possible downside to the swap, if accepted, you get SYF which will have the same amount of shares outstanding, but with an increase in the float. This could cause additional selling which could drop the price.
The said today that the announcement of the share exchange will be announced next week. Hopefully the ratio will be good for both GE and SYF shareholders.
I made a decision after my last post and followed my instincts and sold a November 33 covered call for .80 while the price was still above 32. I figure 33.80 net value (33 plus .80) is pretty good if the stock is taken, If it expires worthless, I will be able to lower my net cost by the .80 that I got for the options. In a month, I will know the results.