Shoppers Drug Mart (Symbol-SC) -- why so beaten down lately?

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Taggart
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by Taggart »

Mesmerized by the price action on the first day this deal was announced, so didn't think I'd get a second chance to sell SC at the price I wanted, but I lucked out today.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by MC Hammer »

In part of the press realease, it says " Loblaw will acquire all of the outstanding Shoppers Drug Mart common shares for $33.18 in cash plus 0.5965 Loblaw common shares per each Shoppers Drug Mart common share".

However, later in the press release, it says "Shoppers Drug Mart shareholders will have the ability to choose whether to receive $61.54 in cash or 1.29417 Loblaw common shares plus $0.01 cash for each Shoppers Drug Mart share held".

Can somone please explain how these two statements are consistent?
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by augustabound »

One thing i've often wondered about M&A, when the company being acquired still trades actively after the shares reach "full value".

On Monday morning 67000 shares traded at 10:30 for $61.48. Who's buying these shares and why?
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by like_to_retire »

augustabound wrote:One thing i've often wondered about M&A, when the company being acquired still trades actively after the shares reach "full value".

On Monday morning 67000 shares traded at 10:30 for $61.48. Who's buying these shares and why?
Doesn't the announcement say: "Shoppers Drug Mart shareholders will have the ability to choose whether to receive $61.54 in cash or 1.29417 Loblaw common shares plus $0.01 cash for each Shoppers Drug Mart share held."

So if you bought 1 share of SC-T at $61.48, it would turn into 1.29417 shares of L-T.

The market price of L-T today is $48.39, so 1.29417 shares are worth $62.62 + $0.01 = $62.62

And perhaps L-T will go higher.

I wonder if that will be a taxable event?

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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by kcowan »

MC Hammer wrote:Can somone please explain how these two statements are consistent?
The offering is based on an estimate of what individual shareholders will elect as a payout. Apply that estimate to the second statement to get the first. Usually the offering memo has some disclaimer that satisfying your election is subject to availability. So, for example, if everyone elects cash, they will be assigned cash and shares per the first statement.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by MC Hammer »

kcowan wrote:
MC Hammer wrote:Can somone please explain how these two statements are consistent?
The offering is based on an estimate of what individual shareholders will elect as a payout. Apply that estimate to the second statement to get the first. Usually the offering memo has some disclaimer that satisfying your election is subject to availability. So, for example, if everyone elects cash, they will be assigned cash and shares per the first statement.
Thanks
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by Taggart »

augustabound wrote:
On Monday morning 67000 shares traded at 10:30 for $61.48. Who's buying these shares and why?
Yes, but that same day the price spiked up to a high of $61.71, well past the $61.54 buyout offer. So what did these investors (speculators) willing to pay this price know that I didn't know? That's what I've been racking my brains on for the last few days, trying to figure out.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by adrian2 »

Taggart wrote:
augustabound wrote:
On Monday morning 67000 shares traded at 10:30 for $61.48. Who's buying these shares and why?
Yes, but that same day the price spiked up to a high of $61.71, well past the $61.54 buyout offer. So what did these investors (speculators) willing to pay this price know that I didn't know? That's what I've been racking my brains on for the last few days, trying to figure out.
"Shoppers Drug Mart shareholders will have the ability to choose whether to receive $61.54 in cash or 1.29417 Loblaw common shares plus $0.01 cash for each Shoppers Drug Mart share held."

1.29417 Loblaw common shares may be worth more than $61.54 in cash (or not).
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by Taggart »

adrian2 wrote:
Taggart wrote:
augustabound wrote:
On Monday morning 67000 shares traded at 10:30 for $61.48. Who's buying these shares and why?
Yes, but that same day the price spiked up to a high of $61.71, well past the $61.54 buyout offer. So what did these investors (speculators) willing to pay this price know that I didn't know? That's what I've been racking my brains on for the last few days, trying to figure out.
"Shoppers Drug Mart shareholders will have the ability to choose whether to receive $61.54 in cash or 1.29417 Loblaw common shares plus $0.01 cash for each Shoppers Drug Mart share held."

1.29417 Loblaw common shares may be worth more than $61.54 in cash (or not).
Thanks Adrian. So perhaps they do know something that I don't, which is a good enough reason for me not to join in the game.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by augustabound »

Ahh, I see. Thanks for the responses.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by Hammerer »

I would have expected worse, SC and L are unmoved today:

"Supreme Court of Canada upholds Ontario’s ban on pharmacy-made generic drugs"

Of course, ignore anything Wynne, Matthews and The Star say about how great this is for people or the government. This ruling only affects the prices paid by the pharmacies to the manufacturers and fabricators. This decision is good for the manufacturers and bad for pharmacies.

Either way, the amount the public and private payors (ie: the government and people) pay at the end of the day stays the same because the government sets the final price for generic drugs.

Edit: Reading the articles written by other media outlets suggests that I'm the only one that understands that this decision has zero impact on what *the government* and *people* pay for drugs.
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by MC Hammer »

I see that Shoppers is now delisted, but I don't remember receiving anything from RBCDI asking whether I wanted to receive Loblaws shares or cash.
Is this something that should have been mailed out to me or something that would have been posted on the RBCDI web-site?
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by AltaRed »

The election would have been mailed March I think by Laurel Hill directly or?

http://www.theglobeandmail.com/report-o ... e17723887/
Shoppers Drug Mart shareholders who did not make a choice will receive $26.53 in cash and 0.7363 Loblaw shares for each share.
http://cdn.agilitycms.com/shoppers-drug ... n-Form.pdf
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Re: Shoppers Drug Mart (Symbol-SC) -- why so beaten down lat

Post by MC Hammer »

Thanks for the response.

My previous holdings that were taken over were held directly through a DRIP, so this is the first time going through the process with RBCDI.
I was away for a couple of weeks at the end of February and had a pile of mail when I returned, so perhaps I missed the mailing.
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