Quick Pitch: Dye & Durham (DND.TO)
Odd Lot Tender Offer – C$100 Upside
This is actionable only for odd-lot accounts and only for investors not liable to pay Canadian withholding taxes on distributions. Software industry player Dye & Durham is conducting a dutch tender for 1.5% of shares at a price range of C$17-C$20/share. The stock trades below the lower end of the range, at C$16/share. Proration is likely to be high, but shareholders owning 99 shares or less will be accepted on a priority basis. The tender expires on June 16. The offer is very likely to get priced at lower limit of C$17/share and odd lot holders have a chance to pocket a pretty much risk-free C$100 in a few weeks (unless the transaction gets canceled or amended). Plus they also get the optionality in case DND shares spike above the C$17 level or the tender gets priced higher.
Paid-up capital stands at C$12.64/share and any distributions above this levels will be treated as dividends. This results in withholding taxes of c. C$0.65/share for non-Canadian residents and eliminates pretty much the whole upside. Thus this situation is only actionable in accounts that are not liable to pay taxes on these dividend distributions.
Shares now at about $15.4, or about $160 CAD, US$120 upside for odd lots
Any way for a US player to avoid the tax issue?
Yes, in a IRA(may depend on the broker, IB doesn’t charge foreign tax in an IRA)
Are you sure about this? I did the tender offer with DOOO back in ’22 and taxes were withheld in my retirement account.
DND share price has declined to C$15.42 vs the tender range of C$17 – C$20/share. At these levels, the setup is actionable also for odd lot holders that are subject to Canadian withholding taxes. These taxes will amount to C$0.65/share. Odd lot holders are set to pocket C$156 before the withholding taxes or C$92 net of withholding taxes. If tender terms remain unchanged, that is as close to risk-free pocket money as it gets. The tender expires in two weeks on June 16.
it makes sense to close position now to pocket 124$ bucks in pocket
Tender is $17-20 so idk about that. Everyone who tendered 17 may pull out and since it’s dutch auction drag the price higher.
Is there a tender withdrawal allowed?
Tender results are out. As was expected, the final tender price is at C$17/share with the offer heavily oversubscribed (albeit it was a small tender only for 1.5% of shares outstanding). Proration at 34%.
Those that did not participate in the tender and held on to their shares made off far better, as DND stock is now at $18.
This was a nice quick trade from the levels in the beginning of June with DND shares traded at C$15.
https://www.sedar.com/GetFile.do?lang=EN&docClass=8&issuerNo=00049561&issuerType=03&projectNo=03551850&docId=5448798
Strange that it was way oversubscribed, yet was trading above that $17 days before and after deadline. Illiquid but still some who chose to tender could have sold higher.
I tendered before it went above $17, and that restricts my ability to sell. Was too lazy to call my broker again to see if they could withdraw my tender.
Anyone have an idea how long it takes to process the odd lots? It closed on friday yet the shares are still sitting in my account as of today although I can’t sell them.
I think it depends on your broker, but could be ~1-2 weeks, which really affects the IRR.
Cheers, it’s the first time I’ve tried an odd lots, lesson learned.