Thursday, October 04, 2012

GCVRZ Dutch Tender Offer

On September 1st, Sanofi (Ticker: SNY) announced a Dutch tender offer for up to 30% of the Contingent Value Rights (CVRs) (Ticker: GCVRZ) at a price of $1.50 to $1.75. I picked up some CVRs at $1.68 on September 28 and promptly tendered. I am expecting a high proration tender at the top end of the price range. This is a pretty significant tender as they are attempting to buy back a third of the CVRs. These CVRs were distributed to Genzyme shareholders as part of the Sanofi takeover. The CVRs have a potential payout of up to $13 if Lemtrada for MS turns out to be a huge blockbuster. I am holding onto the CVRs I received from the Genzyme buyout and will not be tendering those shares. Note that there is no Guaranteed Delivery for these CVRs, which means that the shares must be settled in your account no later than October 5th in order to participate in the Dutch tender offer. I just found out about this clause today. Usually, you can purchase up to the tender expiration date and tender, but not in this case.

8 Comments:

At October 04, 2012, Anonymous Amit said...

Do you have more information on the GCVRZ? Like a link to the sec filing?

thanks

Amit

 
At October 04, 2012, Blogger Money Turtle said...

I couldn't find a link to the SEC regarding the Dutch tender filing. I received the tender material in the mail since I have some CVRs. What type of answers are you looking for?

 
At October 04, 2012, Anonymous Amit said...

Maybe description about it. How it works?

 
At October 04, 2012, Blogger Money Turtle said...

Here's the SEC link with the CVR info:

http://www.sec.gov/Archives/edgar/data/1121404/000119312511056864/df4.htm

 
At October 05, 2012, Blogger jdbear said...

If you purchased units at 1.68 for a Dutch auction to be consummated between 1.50-1.75 it would seem you have more downside than upside. Also, as few as only 30% of the tendered shares may be purchased by SNY. Interested in your reasoning if you care to disclose.

I am wondering how one is able to determine whether guaranteed delivery is acceptable to the transfer agent. If shares purchased today (10/5) cannot be tendered, it would seem to be a relatively safe short, anticpating a drop on Monday,

Also, for the other commenter, the link to the offer is: http://en.sanofi.com/Images/31065_20120904_GENZYME_en.pdf

 
At October 05, 2012, Blogger Money Turtle said...

Yes, there's always the possibility that my analysis is wrong and tender price is at the lower end of the tender price range.

If everyone tendered their shares, yes the pro-ration will be 30%, but that is highly unlikely. The fact that Sanofi is trying too buy back up to 30% of the float is substantial. Looking at the market price of where the shares were trading after the tender announcement, I see high probability that Sanofi will buy back the shares at $1.70 or $1.75.
The tender filing states: "No Guaranteed Delivery".

 
At October 05, 2012, Blogger jdbear said...

Do you have a link to that filing? I couldn't find it on edgar or SNY's PRs. Thanks!

 
At October 05, 2012, Blogger Money Turtle said...

I received the offering document in the mail and could not find it online.

 

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