Description

Tender offers have been few and far between this year but here's a good cheeseburger for the holidays.  This is like one of the old school odd-lots before these were as popular. 

The company is tendering for $100m at a fixed price of US$55/share.  Expiration is 12/28/2023.  Odd-lot for this one is the standard 99 shares.  The stock is currently at US$44.80 so it looks like ~$10/share or $990/account in odd-lot profits.

So what's the issue?  This is Canadian company and has the standard 15% dividend tax for a US shareholder.  For a US holder, the paid-up capital is C$10.60 (or US $7.86 at current FX rates).  As a result, a US holder can expect to lose ~$7 of the $10 in gains per share.  

So for a US holder, here's the trade:

12/2/23 Buy 99 shares of DCBO for US$44.80/share or $4,435.2 total

12/28/23 Tender all shares at $55/share

               Lose Canadian withholding taxes: US$55-US$7.89=US$47.11 * 15% Canadian withholding taxes= US$7.07 in taxes

               Net US$3.13/share or ~US$310/account or ~7% post-tax for the month

This writeup is for the oddlot but there's a lot going on fundamentally. The CEO/founder recently stepped down and subsequently sold ~3/4 of his position in the open market so it makes sense why the stock is down post tender announcement.

https://www.sec.gov/Archives/edgar/data/1829959/000119312523282534/d559699dsc13e4f.htm#tx559699_37

Catalyst

Expiration of tender offer on 12/28/23