​Syngenta Squeeze Out of Minority Shareholders Could Yield 6-12% Annualized or More

Syngenta Squeeze Out of Minority Shareholders Could Yield 6-12% or More

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​A Special Situation Squeeze-Out in Syngenta Stock could Yield 6-12%

Summary:

  • A Squeeze-out is a type of special situation, which includes:
    • Arbitrage
    • Spin-Offs
    • Tender Offers
    • Small Lots
    • Liquidations
  • ChemChina owns 98% of Syngenta and is forcing the deal terms on the remaining 2% of shareholders
  • ChemChina is offering $93.00 per share and the stock is trading at $92.00 for a %1.08 return.
  • The squeeze out can occur at any moment, with a high probability of completion by the end of September for a 13% annualized return.
  • A mid-September close could push the annualized return up to 26%.
  • Since the transaction itself has already completed, there is almost no risk at all.

The SYT American Depository Shares or “ADS” is equal to 1/5 of a share.

How to calculate your break even investment for this squeeze-out

The deal price was for $465 per share or $93 per ADS.

With the stock selling at $92.00, you get $1.00 profit per share. Many brokerages will charge a fee for the transaction that will occur in the squeeze out. Somewhere in the $25 to $35 range. For this deal to be profitable, you have to cover your costs first. To cover your $35 fee, and your commission ($7), you will need to buy at least 42 shares for a total investment of $4,864 just to realize a profit before costs of $42 break even.

There is the least risk in this type of special situation out of all of them, so you could up-size your usual position size if you have the capital. What kind of profit is really possible?

What kind of profits are possible?

If my position size is $100,000 and I am able to acquire a full position in this very illiquid stock, my profit would be $100,000 x .0108 or $1,080, less commissions and the $35 fee. As you can see, this type of lowest risk investment does not generate oodles of cash unless you are working with a ton of capital. It IS a better use of cash than most savings accounts in terms of yield, however.

What kind of liquidity does the stock have?

Keep in mind that only 2% of all of the original outstanding shares are still floated, so this is a very illiquid stock and the only way to achieve a profit of any kind is to keep buying until the transaction closes. You should not expect to get your money back for a few months.

Will there be Swiss Witholding tax of 35%?

On July 13, 2017, Chemchina announced that buy buying in some of the remaining shares, it had reached 98% ownership. This ownership level is key because if the Swiss tax that could have been levied on shareholders if the squeeze-out represents more than 2% of the outstanding shareholders. In this fantastic article by Seeking Alpha contributor An Arb and Leg’s Blog published on May 23, 2017 about the Syngenta acquisition by ChemChina, the author describes this Swiss Withholding Tax dilemma.

https://seekingalpha.com/instablog/9520991-an-arb-and-a-leg/4991722-chemchina-syngenta-may-go-syngently-night

Personally, I did not get involved in this idea until AFTER this July 13 announcement. I wish avoid as many taxes as possible.

How long will it take for the Basel Appellate Court to approve the squeeze-out and for the transaction to take place in brokerage accounts?

This is the magic question. Courts have calendars

Here are the documents and key information from the history of this transaction in reverse chronological order.

July 13, 2017

“Following the purchase of additional Syngenta shares, ChemChina's participation in Syngenta has exceeded 98% of Syngenta's share capital.

As a consequence, ChemChina has filed a petition with the Basel Appellate Court to cancel the remaining Syngenta shares that are not held by ChemChina or any of its affiliates. Holders of these Syngenta shares will receive the offer price of USD 465 per Syngenta share following completion of the court proceedings.”

https://www.sec.gov/Archives/edgar/data/1123661/000095010317006708/dp78326_6k.htm

On June 7, 2017

China National Chemical Corporation (ChemChina) today announced the successful completion of the Second Settlement of ChemChina’s tender offers for Syngenta. Shareholders who tendered their shares after 4 May 2017 received the consideration of US$465 per share, and holders of American Depositary Shares ("ADSs") who tendered their ADSs received US$93 per ADS, on June 7, 2017. In the First and the Second Settlement, ChemChina acquired 94.7 percent of Syngenta shares in aggregate.

As soon as permitted by law and applicable regulation, it is intended to de-list the shares from the SIX and to de-list the ADSs from the NYSE.

https://www.sec.gov/Archives/edgar/data/1123661/000095010317005549/dp77152_6k.htm

On May 31, 2017

ChemChina and Purchaser announced the definitive end results of the Offers. Based on finalized numbers, a total of 87,455,312 Common Shares (including those represented by ADSs) (approximately 94.7% of the Common Shares (including those represented by ADSs)) have been tendered. The Second Settlement will occur on June 7, 2017.
https://www.sec.gov/Archives/edgar/data/1123661/000119312517188450/d514390dsctota.htm


 

April 5th, 2017

ChemChina and Syngenta today announced that they have received approval from the US Federal Trade Commission (FTC) for the proposed acquisition of Syngenta by ChemChina. This represents a major step towards the closing of the transaction, which is expected to take place in the second quarter of 2017.

https://www.sec.gov/Archives/edgar/data/1123661/000095010317003304/dp74904_6k.htm

March 23, 2016
Tender Offer on Form SC TO-T

https://www.sec.gov/Archives/edgar/data/1123661/000119312516514057/d134186dex99a1i.htm

https://www.sec.gov/Archives/edgar/data/1123661/000095010317007099/dp78719_6k.htm

As of March 23, 2016, CNAC Saturn (NL) B.V. (“the Offeror”), a subsidiary of China National Chemical Corporation (ChemChina), a state-owned enterprise of the People’s Republic of China, launched public tender offers in Switzerland and in the United States to acquire all the publicly held Ordinary Shares and, in the U.S. offer, also all American Depositary Shares (ADSs) of Syngenta AG (“the ChemChina Tender Offer”) for $465 per Ordinary Share in cash. On May 10, 2017, it was announced that, as of the end of the Main Offer Period, 76,128,826 Syngenta AG Ordinary Shares (including those represented by ADSs), corresponding to 82.23% of the voting rights, had been tendered in the ChemChina Tender Offer and that the Offer had been successful. On May 31, 2017, it was further announced that, as of the end of the Additional Acceptance Period, the definitive end result of the ChemChina Tender Offer was that the Offeror’s participation was 87,650,988 Syngenta AG Ordinary Shares (including those represented by ADSs), corresponding to 94.68% of the voting rights. Consequently, Syngenta AG’s parent company is now CNAC Saturn (NL) B.V. and its ultimate parent company is ChemChina.

About Syngenta

Syngenta AG is a global Swiss agribusiness that produces agrochemicals and seeds. Syngenta is a leading agriculture company helping to improve global food security by enabling millions of farmers to make better use of available resources. Through world class science and innovative crop solutions, our 28,000 people in over 90 countries are working to transform how crops are grown. We are committed to rescuing land from degradation, enhancing biodiversity and revitalizing rural communities. To learn more visit www.syngenta.com

About ChemChina

China National Chemical Corporation is a Chinese state-owned chemical company in the product segments of agrochemicals, rubber products, chemical materials and specialty chemicals, industrial equipment, and petrochemical processing.

​DISCLOSURE: Long SYT

​Ask JB: How do I think about dividend related dates to ensure that I receive the dividend?

JB Noob question about dividends (self.investing)

submitted 8 hours ago by RossFromBritain

Sorry if this is extremely basic but I'm new to learning about investment. If a company issues dividends on, say, the 1st of June - do you need to own stock for a specific amount of time before that date in order to receive the dividend? I assume it would have to be the full year?

JB Says: You only need to have held the stock until the start of the ex-dividend date, which you can look up for that company’s dividend.

  • Record Date – typically two business days after the ex-dividend date
  • Ex-Dividend Date – the first date that if you purchase a stock you will not receive the dividend payment – typically two business days before the record date
  • In sum, if you purchase BEFORE the ex-dividend date, you get the dividend.

https://www.sec.gov/fast-answers/answers-dividenhtm.html

Declaration Date

Ex-Dividend Date

Record Date

Payable Date

Friday, 7/26/2013

Thursday, 8/8/2013

Monday, 8/12/2013

Tuesday, 9/10/2013

“Bank of America Corporation today (July 26) announced the Board of Directors declared a regular quarterly cash dividend on Bank of America common stock of $0.12 per share, payable September 29, to shareholders of record as of September 1.”

Ask JB: Why does every new investor think penny stocks are good (self.investing)

submitted 2 hours ago by naplesfanboy

I talk to my friends about investing and they all ask what I think about these penny stocks. I am trying to steer them away but why does everyone think penny stocks are the way to get wealthy?

JB Says: Most people lack the most important quality in investing – patience. There are whole industries that cater to that gambler mentality that so many people have, horse racing, table gambling, and penny stocks. Even in investing, there are systems sold that purport to help you “get rick” only the only person getting rich is the one selling the system.

Do you have a burning question on investing you would like answered? Click the button below to send it to me and I will answer it on the podcast!


​Activist Investor Action Alert: Gamco Influences $LEN

http://www.barrons.com/articles/gamco-wants-lennar-to-reconsider-its-governance-practices-1505533168

Thoughts on this podcast? Disagree with me on some point? Something I missed? Leave a comment!

About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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