Followers | 241 |
Posts | 12162 |
Boards Moderated | 3 |
Alias Born | 04/05/2009 |
Saturday, March 09, 2024 8:34:19 PM
Story by Andrew Bary
An exchange offer by Cummins, the diesel engine maker, for shares in Atmus Filtration Technologies allows small investors to fully participate and potentially make about $2,000 on the trade in the next week or so.
The $1.5 billion exchange offer, which expires on March 13, is appealing because Cummins investors will be able to swap their shares for Atmus at a 7% discount, subject to certain conditions. That means a Cummins holder would get $107.53 of Atmus stock for every $100 of Cummins stock tendered, according to Cummins.
tastytrade Trading Account - Capped Options Commissions
Ad
Tastytrade
tastytrade Trading Account - Capped Options Commissions
Cummins shares were up 1.8% to $271.02 Friday, while Atmus was down 2.2% to $23.60. The S&P 500 was down 0.5%.
The offer is expected to be oversubscribed, resulting in a proration, meaning participating Cummins holders likely will get just a fraction of their shares exchanged for Atmus stock. The proration is expected to be about 10%, meaning a Cummins holder who wants to swap 1,000 shares may get only 10% of that stake, or 100 shares, exchanged for Atmus.
There is, however, a so-called odd-lot exception to the proration. Small investors who hold less than 100 shares of Cummins and tender their entire investments won’t be subject to proration. This is similar to what occurred in Johnson & Johnson’s exchange offer for Kenvue last summer.
This can allow investors to buy 99 shares of Cummins and fully participate in the tender.
Here is some rough potential math. An investor could buy 99 shares of Cummins for about $26,700 and then participate in the tender. The holder stands to get $107.53 for every $100 of Cummins stock tendered, or about $28,700. That is a profit of around $2,000.
Related video: Retail investors buy the dip: Here's what you need to know (CNBC)
CNBC
Retail investors buy the dip: Here's what you need to know
However, an S-4 filing states that those who hold less than 100 shares, but don’t fully tender all their stock, will be subject to proration.
What are the risks? Atmus stock could fall between the time the investor buys the Cummins stock and when the investor gets the Atmus shares, which should occur in the next two weeks or so. There also is a cap of about 13.4 on the number of Atmus shares that Cummins will pay out. The current ratio is below that cap at around 12.
The ratio will be set based on volume weighted average price of Cummins and Atmus stock on March 7, 8, and 11. The pricing information is updated daily on a website.
While the tender deadline is March 13, individual brokerage firms have their own deadlines for retail clients. For Schwab (and TD Ameritrade) customers, the deadline is March 11. Schwab customers could purchase the stock Friday (for settlement Tuesday) and be able to participate in the tender process.
Borrow from Your Home, Not the Bank ($25k for as low as $164/mo)
Ad
LendingTree
Borrow from Your Home, Not the Bank ($25k for as low as $164/mo)
For clients of Fidelity Investments, the deadline is March 12, with Fidelity handling tenders on March 13 on a best-efforts basis by 2 p.m. Eastern.
Atmus makes filters for trucks, heavy equipment, trains, and other applications. It was taken public in May 2023, when 19.5% of the company, or 16.2 million shares, were issued at $19.50 a share and Cummins retained 80.5%, or 67 million shares. Those 67 million shares will be swapped in the exchange offer.
Atmus is an inexpensive stock relative to other filtration companies such as Donaldson. Its stock trades for about 10 times projected 2024 earnings, based on the company’s guidance of $2.10 to $2.35 in profit this year.
https://www.msn.com/en-us/money/markets/retail-investors-could-make-2-000-on-cummins-exchange-offer-here-s-how/ar-BB1jzErP
"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, Founder and CEO of Harwood International
Recent CMI News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 10/07/2024 09:02:37 PM
- Form 4/A - Statement of changes in beneficial ownership of securities: [Amend] • Edgar (US Regulatory) • 09/13/2024 06:45:15 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/12/2024 09:18:25 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/27/2024 10:54:46 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/23/2024 08:27:14 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/22/2024 08:25:04 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 09:24:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/20/2024 06:17:18 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 05:50:18 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/15/2024 08:16:26 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/01/2024 03:27:37 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/01/2024 11:50:59 AM
- Cummins Reports Strong Second Quarter 2024 Results • Business Wire • 08/01/2024 11:30:00 AM
- Accelera by Cummins Awarded $75 Million for Zero-Emissions Manufacturing from Department of Energy • Business Wire • 07/11/2024 06:00:00 PM
- Cummins Demonstrates How its Business and Sustainability Strategies Are Aligned, Effective in 2023-24 Sustainability Progress Report • Business Wire • 07/11/2024 11:30:00 AM
- Cummins Inc. Increases Quarterly Common Stock Dividend • Business Wire • 07/09/2024 08:15:00 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 07/09/2024 08:06:56 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 07/09/2024 08:05:55 PM
- Accelera by Cummins, Daimler Truck and PACCAR Complete Battery Joint Venture Transaction to Form Amplify Cell Technologies and Names New CEO • Business Wire • 06/04/2024 12:00:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/03/2024 08:38:36 PM
- Cummins-Meritor Regional Brake Training Events Return in 2024 • Business Wire • 06/03/2024 12:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/31/2024 05:31:40 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/30/2024 08:06:25 PM
- Tony Satterthwaite Retiring After Distinguished Career at Cummins • Business Wire • 05/30/2024 05:00:00 PM
- Form SD - Specialized disclosure report • Edgar (US Regulatory) • 05/29/2024 08:14:45 PM
ZenaTech, Inc. (NASDAQ: ZENA) Launchs IQ Nano Drone for Commercial Indoor Use • HALO • Oct 10, 2024 8:09 AM
CBD Life Sciences Inc. (CBDL) Targets Alibaba as the Next Retail Giant for Wholesale Expansion of Top-Selling CBD Products • CBDL • Oct 10, 2024 8:00 AM
Foremost Lithium Announces Option Agreement with Denison on 10 Uranium Projects Spanning over 330,000 Acres in the Athabasca Basin, Saskatchewan • FAT • Oct 10, 2024 5:51 AM
Element79 Gold Corp. Reports Significant Progress in Community Relations and Development Efforts in Chachas, Peru • ELEM • Oct 9, 2024 10:30 AM
Unitronix Corp Launches Share Buyback Initiative • UTRX • Oct 9, 2024 9:10 AM
BASANITE INDUSTRIES, LLC RECEIVES U.S. PATENT FOR ITS BASAFLEX™ BASALT FIBER COMPOSITE REBAR AND METHOD OF MANUFACTURING • BASA • Oct 9, 2024 7:30 AM