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EXCHAGE: BristolMyers and Mead Johnson


Issue:

How do I enter the exchange of Bristol-Myers Squibb stock for Mead Johnson shares?

Cause:

For more information, refer to the Bristol-Myers Squibb web site at:
http://investor.bms.com/phoenix.zhtml?c=106664&p=irol-sec&secCat01Enhanced.1_rs=51&secCat01Enhanced.1_rc=10

Look for the SC TO-I filing on 11/16/2009 on the web page cited above for details.

Resolution:

This transaction is a “split-off”. It differs from a spinoff in that those receiving Mead Johnson shares will be reducing the number of shares they hold in Bristol Myers. In addition, the offer to exchange was over-subscribed. So only a portion of BMY shares offered to be exchanged were actually exchanged. The ratio was about 54% of BMY shares offered for exchange were actually exchanged.

Entering this transaction in Club Accounting can be accomplished by entering two transactions. The first is a reverse split of BMY shares. The second is a spinoff of MJN from BMY. For the purpose of this transaction, we use an example case where the club had 200 shares of BMY before the transaction, and ended up with 92 shares afterwords.

First, check to see if any transaction you have entered for this match the solution below. If not, delete these transactions.. 

The first transaction to enter will be a Stock Split. For information on how to enter a stock split, please see our web site at:

Following is the information to use when entering the stock split 
  • Date: 12/22/2009
  • Company or Ticker: Bristol-Myers Squibb / BMY 
  • Split Ratio: In the Split Ratio fields enter (the # of shares of BMY after exchange) for (the # of shares after exchange).
For example, if you had 200 shares of BMY before the exchange and 92 after the exchange you would enter a split ratio of “92 for 200”. 

You can check the field Shares After Split , that the correct number of after-exchange shares are left. The number in this field should correspond to your after-exchange BMY shares held.



The next transaction to enter will be a Spinoff. For information on how to enter a spinoff, please see our web site at:
http://www.iclub.com/support/kb/default.asp?page=normal_spinoff

Following is the information to use when entering the spinoff:

Date: 12/23/2009
  • Cash Account: Whichever cash account the cash in lieu of fractional shares was deposited to
  • Parent Security or Ticker: Bristol-Myers Squibb / BMY
  • Remaining Basis: This requires a bit of calculation, as follows:
(# of BMY shares after the exchange) divided by (# of BMY shares held before exchange).
Continuing with our example figures, 92 shares of the original 200 BMY shares were kept. 
The remaining basis percentage would be 92/200 = 46%. So we're entering 46 in the Remaining basis percentage field.
  • Spinoff/Daughter company: Mead Johnson / MJN
  • Shares Received: # of BMY shares exchanged multiplied by .6313 (For example, we started with 200 shares of BMY, and ended with 92, so our # of shares exchanged is 108)
  • Price Per Share: 43.05 (43.05 was the opening price of MJN on 23 December 2009, the day BMY announced the completion of the transaction.)
  • Cash in lieu: Any cash received for fractional shares.



You may also find this worksheet useful in calculating some of the figures used above

Split ratio:
(# of BMY shares after the exchange) for (#of shares of BMY before the exchange)
______________ for _________
Your total shares after this split should be LESS than before this transaction.


Remaining basis percentage:
(shares of BMY after the exchange) divided by (shares of BMY before the exchange) =
___________________


Shares of MJN received:
(shares of BMY before the exchange) minus (shares of BMY after the exchange) 
Then multiply the result by .6313

__________________ x .6313 =____________




 
  
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