However, for odd lot shareholders (holding less than 100 shares) the offer is not subject to proration. So the trade here is pretty easy- on Tuesday, Jan 22, buy 99 shares of PPG’s stock- note that you need to buy on this date so you own the shares by Jan. 25. Call your broker to tender the shares.
I believe the new GGC shares should be trade-able on that Monday, but if not you can just calculate how many shares you will receive using this site PPG set up and short that many, and in a week or so the shares you receive will net out that short. Make 11% + or – any swings in the market in that week or so.
Now, you will note that you are subject to market fluctuations here. If the market dropped 20% in a week, you’d be looking at a loss. Or if GGC shares got crushed while PPG shares stayed flat or rose you might hit the upper limit and not make as much, or even take a loss. You could hedge in a couple of ways
- Sell a call on the PPG shares, and then buy it back on Friday. If PPG shares rise, just cancel your offer to exchange, sell them and buy the call back.
- Short GGC shares on Tuesday, though because the exchange ratio isn’t determined till Friday this could hurt you if GGC rises and the exchange ratio decreases.
I think the best option is actually just option 3- buy PPG and say that the market will do what it will do. You’re only exposed to market risk for a week, and, over a long career, sometimes the markets will rise and you will benefit a bit, sometimes they will fall and hurt you a bit. But the market exposure here will basically balance out over your whole career(likely a bit in your favor, since markets tend to rise).
Personally, I think the ALJJ tender is still more attractive. But once that Tuesday rolls around, buying and exchanging the share will look awfully attractive for the odd lot position.
Disclosure- Long ALJJ