Biotech Values

[DewDiligence]

ZTS—I don't like the uncertainty how many shares I could get exchanged…

If you can wait until the close on June 18 (or anytime on June 19) to tender, you’ll have a pretty good idea what the exchange rate will be because 2/3 of the VWAP-averaging days will already be in the books.

My broker (E*Trade) is guaranteeing execution only if shares are tendered by midnight on June 17, at which time only 1/3 of the VWAP-averaging will be pinned down. (For tenders after June 17, E*Trade says that it will make a “best efforts” attempt to execute.) Still, even for shares tendered after the close on June 17, you’ll have some idea of the likely exchange ratio.

If it were based on the current share prices (where ZTS shares trade at 1.175 times PFE shares), the exchange ratio would be 0.91. Thus, it seems pretty likely that the 0.9898 upper bound on the exchange ratio won’t come into play and that participants in the swap will get the full 7% discount on their ZTS stake.