Description
A situation with the possibility of making some beer money.
Apologies for the late notice, you would need to move quickly on this, but I figured I’d throw it out there anyway.
Buy 99 shares of ECL
Tender all shares before the close today
Short approx. 2442 shares of APY
Net proceeds approx. $950
Ecolab split off its upstream energy business (ChampionX), which will merge with Apergy in a RMT deal. The ChampionX shares will convert into Apergy shares. Ecolab shareholders can tender to receive shares of Apergy at a discount of 10 percent to the per-share value of Apergy common stock, subject to an upper limit of 24.6667 shares of ChampionX common stock for each share of Ecolab common stock tendered in the exchange offer. Given the current VWAP ratio, that upper limit is currently in effect. Apergy holders just voted in favor of the deal. The latest update is below.
https://www.sec.gov/Archives/edgar/data/31462/000155837020007094/ecl-20200528x425.htm
The exchange offer and withdrawal rights will expire at 12:01, New York City time, on June 3, 2020, unless the exchange offer is extended or terminated.
They give preference to odd lots of sub 100 shares. “Beneficial holders (other than participants in any of the Ecolab Savings Plans) of less than 100 shares of Ecolab Common Stock who validly tender all of their shares will not be subject to proration”
Based on the VWAPs in the latest update, the ratio limit of 24.6667 is in effect. So if you buy 99 shares of ECL at 211, you should receive 2442 shares APY. Shorting those out at 8.95 you stand to make ~$960 before trading and borrow costs.
Borrow is available on APY at IBKR
Of course, I may have messed up, so LMK what you think
Risks: ECL can extend the date, deal falls apart etc.
I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.
Catalyst
Close of the deal, exchange of shares