By allowing us to buy 1 Arcam share for each Arcam share owned on the record date, October 19, for SEK 240, we are able to double our share holding without doubling the money tied up in the investment, but there's more, see the italic section below.
Lately Arcam has been trading at around $40, + or -, so that allows anyone that buys in at $40 to bring the average cost basis down to around $35, a slight premium to GE's offer about a year ago, but there's more to it than that. See the italics section below.
The statement about subscription rights is, "Shareholders receive one (1) subscription right for each ordinary share held as of the record date. Five (5) subscription rights entitles the holder to subscribe for one (1) new ordinary share in the Rights Issue."
Let's say you own 100 shares of Arcam on October 19. That gives you 100 subscription rights, so that entitles you to subscribe for 20 additional ordinary shares in the Rights Issue. So, at an attractive price, they're giving shareholders of record the right to more than double the number of shares they hold. Having 100 shares as of the record date actually means you can buy 120 shares at SEK 240.
At approximately the exchange rate we are seeing today between the SEK and the dollar, the weighed average cost basis of someone buying 100 shares at $40 that takes full advantage of the subscription rights is-
(100 * 40 + 120 * 30) / (100 + 120) = $34.55
I say that opting for the subscription rights will be good protection against share dilution. Having everyone participate fully, including Elliot Management, will prevent GE obtaining 90% ownership of Arcam, and all that follows under Swedish law.
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