June 1 is the record date for the dividend. Its payment was contingent upon the merger not being closed by this date. Closing will be after 6/1 so div will be paid.
The prospective dividend policy was stated to be a 75% payout. So we will need to see what the new entity's earnings (per share) look like to determine the quantum of the new dividend. A few moving parts here, but the picture should be clearer with some pro-forma projections.
Depending upon what "close" means it seems that despite the apparent FTC non-disapproval a lot would need to be done by June 1. My own opinion is that we get one final LO dividend (with some wishful thinking!)
The next RAI dividend is payable July 1 to shareholders of record as of June 10. So it will depend upon when closing occurs, and whether the timing permits new RAI shareholders, i.e., via the LO share "conversion" to be recognized. This, among myriad other details, would need to be spelled out upon closing.
LO's price is now above $72, as it converges to the merger valuation formula of $50.50 + .2909 of RAI's price. All indications are FTC approval, possibly next week, so this movement is not unexpected. The merger value and the LO price have been coming closer for the past few weeks.
It has been a long and tedious slog but we are almost there. I wouldn't mind the LO dividend, though, which is forgone if the close is before June 1.
A good holiday weekend to all, too.
At this stage I'd be very surprised if closing occurs on or before 6/1/15, so I think we get one more div. Thank you slow as molasses FTC...
Yes, like watching grass grow. I also think that RAI should provide some status or update to the FTC approval process, especially since management had stated that a first quarter 2015 closing was expected [I thought that was ambitious given the issue of potential duopoly and number of players], and that is now passed.
Agreed; I do wish, though, that RAI would give a current status on the merger, rather than our having to rely on speculative "reports" from the media.
Fairly straightforward, unfortunately. By holding you do have the potential appreciation on the RAI shares, but need to fork over taxes on non-cash gains for that portion. Boo!!!
I think that's premature. Speculation is that it will be approved, but no official word yet. Share price movements (as of 10:40 EDT) also suggest no official news.
catch, sounds like a nice hedge of sorts -- never want to be greedy. When RAI brought Susan Cameron back I had confidence that she would steer the merger successfully. But with effectively four parties, including and not underestimating BTI with its 42% RAI stake, I knew it would be a prolonged process. Share prices over the past week tell me that approval should be soon (the market knows!).
I believed all along it would get approved, but that closing would be closer to mid-year than 1q15 as the initial expectation was. As far as the NY Post is concerned I recall it also had an article several weeks ago suggesting that the FTC would disapprove the merger. So the paper has flip-flopped, and while the Post is great for sports coverage/news, it has little credibility on the business/financial side. So take it from where is comes.
In any event, good luck to all the LO and RAI longs!
Sounds like that jerk who posted months ago on the board about shorting LO.
Re Greenlight, were they making a bet that the merger would not be a go?
Dividend was paid on 4/1. My opinion (only!) is that no action on dividend change would occur until after the merger is closed. If it is delayed past 6/30/15, then I think the dividend payable 7/1 would remain at its current level.
Interesting, and thanks for this. I am not surprised that the FTC is seeking more divestitures than the original set. If Doral does the trick, then fine -- it's not strategic to RAI going forward, and ups Imperial's portfolio a bit. Still, it entails more time to alter the existing arrangement given that 4 parties are involved.
The terms are $50.50 cash and .2909 shares of RAI for each share of LO held. So when the merger closes, the share price of RAI on that day determines what the deal "price" is, but obviously if you hold onto the RAI shares their value will vary as its price does over time. The interim swings of RAI aren't really important unless one is contemplating the sale of the LO shares prior to the close and trying to assess an advantage in doing so.