Closing
Price of LVLT Shares |
$57.82 |
Closing Price of CTL Shares |
$24.67 |
Value of 1.4286 CTL Shares |
$35.24 |
Cash Component of Offer |
$26.50 |
Current Value of Offer |
$61.74 |
Wait for the deal to close and you have $61.74 in value.
Scenario one -- Duplicate the Close Now
Sell
LVLT and Buy 1.4286 CTL Cash Left |
$22.58 |
1.4286 * Three Quarters CTL
Dividends |
$2.31 |
Cash Left Plus Effective
Dividends |
$24.89 |
Less $26.50 |
-$1.61 |
Return Needed |
6.47% |
You will have a total of $24.89 by the close. However, you will have $22.58 to invest immediately plus $2.31 in dividends by the close.
Scenario two -- Go All At On CTL
CTL
Shares per LVLT Share |
2.343737333 |
Three Quarters Dividends |
$3.80 |
Value of 2.343737 CTL Shares |
$57.82 |
Total Value |
$61.62 |
At the closing price of CTL and LVLT you could sell LVLT and buy 2.344 shares of CTL for each share of LVLT you sold. Add in three quarters of dividends and you get $61.62 in total value by the end of the third quarter. Plus you get the use of the dividends as they are paid.
It will be interesting to see how the prices move when CTL goes ex-dividend in March.