Mallinckrodt completed its merger with Questcor on 8/14/2014 for cash and Mallinckrodt stock.
Information in the steps below was taken from filing S-4A and 424B3 filing of 7/11/2014, posted in the Investor Relations area of the Mallinckrodt web site.
This merger is a cash plus stock reorganization. For tax purposes this is treated as a sale of Questcor, where the proceeds are then used to purchase Mallinckrodt. All the information below is from the information available in the S-4 or 424B3 filed with the SEC.
1. Sell Transaction
The total merger consideration is $92.70 per Questcor share. This is $30.00 in cash and $62.70 in Mallinckrodt shares (.897 x 69.90). Calculate the total value received for your Questcor shares by multiplying 92.70 by the total shares of Questcor owned.
Total Proceeds = [92.70 x (# of Questcor shares owned)] – (Reorganization fee).
Use the Suspense account to receive the sale proceeds.
Date this transaction 8/14/2014.
2. Transfer Cash Received
Transfer from the Suspense account to the Broker account (or bank if appropriate), all of the cash received from this transaction.
This will be the sum of the $30 per Questcor share plus any cash-in-lieu received for fractional shares of Mallinckrodt. If your Suspense account balance was zero when you entered the sell transaction above, then the balance after transferring the cash received will be the total purchase price of the Mallinckrodt shares you received in this merger.
3. Buy Transaction
Enter a buy transaction for the WHOLE number of shares received in this merger.
Date the transaction 8/15/2014. The total purchase price will be the amount remaining in the Suspense account. The amount should be 69.90 x (whole number of Mallinckrodt shares received. The price used here is the opening price of Mallinckrodt on the merger completion date, 8/14/2014. The buy is dated 8/15/2014 because the holding period starts the day after the merger completion date.
If you had 100 shares of Questcor you would be receiving 89 whole shares. (100 x .897 =89.7, whole number received = 89) The purchase price would be 69.90 x 89 = 6221.10
Save the buy transaction and the entries needed to complete this merger are done.