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MERGER: Guidant Corp (GDT) and Boston Scientific (BSX)
Issue:
This GDT/BSX merger is an atypical merger with extra cash, as the entire transaction is taxable
Cause:
Refer to the BSX filing: http://phx.corporate-ir.net/phoenix.zhtml?c=62272&p=irol-guidant
Resolution:
This merger is not a typical cash plus stock reorganization. It is a completely taxable transaction, as has been attested to by the parties' experts.
For each Guidant Corp.common share, holders received $42.00 in cash and 1.6799 shares of BSX common stock valued at $22.49 per share.
The date of the transaction is 4/21/06
Step 1) If you have made any entries for this transaction in the Club Accounting software, you should delete them. You can ignore any warnings about blocks of stock that will be lost.
Step 2) Determine the consideration you received.
2a) Cash. Your number of Guidant shares ____________ *$42.00 =____________, cash received.
2b) Your number of Guidant (GDT) shares ____________* 1.6799 = ____________, your number of BSX shares
Remember to include the fraction - don't round it off! Your broker will sell the fraction later and give you cash as "cash in lieu". You will enter this sale of the fractional share in Step 5 below.
2c) Multiply the number of BSX shares (above) ____________ * $22.49/share = $____________,
then add in the cash received (2a) $____________ = the Gross Consideration $____________ .
2d) Deduct the Reorganization Fee, if any, charged by the broker $____________ = the Net Consideration $____________.
Step 3) Enter the sale of your GDT shares for the Net consideration in Step 2d, above.
Step 4) Enter the purchase of your BSX shares. The number of BSX shares as listed in 2b____________ purchased for $22.49 per share equals $____________, the total purchase price.
Step 5) Enter the interest portion of the Guidant distribution.
5a) Your number of Guidant shares ____________ * $0.28 per share =____________, total Interest Income for BSZ. This is interest income, and is not a qualified dividend under the IRS regulations.
5b) Go to: TRANSACTIONS > INTEREST (CA3) or ACCOUNTING > CASH ACCOUNTS > RECORD ACCOUNT INTEREST (CAO)
5c) Set the date to 04/21/06
5d) Enter the cash (5a, above) in AMOUNT. Complete the rest of the form and select OK (CA3) or SUBMIT (CAO).
Step 6) Enter the sale of the fractional portion of the BSX shares, from the broker statement.
Consult your broker statements to determine the dates of the above transactions. If you have any questions on this please let us know.
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