Danaher (DHR) split-off of Potomac Holdings, and Potomac's merger with NetScout (NTCT).

Danaher split off Potomac Holdings LLC. This involved exchanging shares of Danaher for shares of Potomac. The total shares of Danaher will be reduced by the shares exchanged for Potomac shares. Potomac Holding then was immediately merged with NetScout with Potomac shareholders receiving 2.4 shares of NetScout for every Potomac share.

Depending on the number of shares of Danaher the club held, and then exchanged, this transaction can be entered either as a simple merger, or as a spinoff, followed by a reverse split.

Since Potomac was immediately merged into NetScout after being split off, the net change for cost basis purposes is equivalent to Danaher splitting off NetScout. The information below is based on the information available from the Danaher web site. This transaction is further complicated by the fact that all Danaher shares tendered for exchange were actually exchanged for Potomac shares. The exchange was oversubscribed so depending on the number of shares exchanged, a proration factor of 83.2431% may be applied to the Danaher shares tendered, to get the actual shares exchanged. This will cause the remaining basis percentage to vary with each individual transaction. Instructions for calculating this amount for your situation will be included below.

If your club held less than 100 shares, and tendered all of them, this transaction can be entered as a standard merger. To see the information needed for this, please click here, to skip to the merger section of this FAQ. For all other cases, please take the following steps, instead:

Part 1. Calculations before any entries.

A. Your actual number of Danaher shares exchanged.

If less than 100 shares were tendered, the actual shares exchanged should be the same as the number tendered for the exchange.

If more than 100 shares were tendered, then the shares tendered need to be multiplied by the proration factor of 83.2431%:

Shares tended x .832431 = Shares Exchanged.

For example if you tendered 100 shares your actual Danaher shares exchanged would be:
100 x .832431 = 83.2431 shares.

B. Number of Danaher Shares remaining after the exchange.
This will be Total shares before the exchange minus shares actually exchanged calculated in A above. Your broker may report your Danaher shares reduced by a larger whole number. This may be due to your total shares after the exchange having a non-whole share component. Brokers normally do not keep non-whole shares, so they may sell this portion of you Danaher holding after the exchange. Do not use the broker reported amount in these transactions. Calculate the actual numbers. These instructions have sections to reconcile the broker reported amounts.

C. The Remaining Basis Percentage of Danaher shares for the Spinoff.
This will be the ratio of Danaher shares held after the exchange to the total number of Danaher shares before the exchange, or (Danaher shares after exchange) / (Danaher shares before the exchange). Make sure to use the calculated shares after exchange, as figured in item B, above.

D. Number of NetScout shares received.
This will vary with the number of Danaher shares actually exchanged. The exchange ratio was 2.4 NetScout shares per old Danaher share exchanged for Potomac Holdings.
Take the result from A, above, and multiply by 2.4.

In the previous example 83.2431 shares were actually exchanged for the 100 Danaher tendered. The number of NetScout shares received would then be 83.2431 x 2.4 = 199.783 (rounded).

With these numbers calculated, you can enter the spinoff.


2. The Spinoff Entry:

  • Date: 7/14/2015
  • Select Parent Security (or Parent Company) : Danaher
  • Remaining Basis Percentage: The result of calculation C.
  • (Danaher shares held after exchange /Danaher shares held before exchange)
  • Cash received: See your broker statement for cash-in-lieu received
  • Spinoff Security (or Symbol of New Company) : NetScout (NTCT)
  • Shares received : 2.4 x (#of Danaher shares exchanged) (Remember to include fractional shares.)
  • This is the result of calculation D explained previously.
  • Price Per Share : 37.50 (Average of opening and closing price on 7/14/2015)

Save the transaction and the spinoff has been entered.


3. The Reverse Split Entry:

A split-off decreases the number of shares held of the parent company. A reverse stock split can account for this. The split ratio will vary with each transaction.

Go to Transactions > Spinoff or Accounting > Securities > Record spinoff of securities depending on the version of the software being used. If you are unfamiliar with spinoff transactions you can get help at this url: https://www.iclub.com/support/kb/default.asp?page=normal_split

Here is the information you need to complete the reverse split.

  • Date: 7/14/2015
  • Security : Danaher (DHR)
  • Split Ratio : (# of Danaher shares after the exchange ) for (# of Danaher shares before exchange)
  • The first part of this split ratio will be the result of calculation B.
  • Cash for Fractional Share : See your broker statement. Do not confuse the amount with the cash received for fractional shares in the spinoff described above.

Save the transaction and the reverse split has been entered.

Note: If you tendered 100 or more shares the actual number of Danaher shares exchanged was prorated by 83.2431%. It is likely the shares exchanged included a fractional portion. This will result in the total remaining Danaher shares having a fractional component. Brokers will often sell this portion. The reverse split accounts for this action. The results of the reverse split will include a fractional share component. This will be sold for the Cash for fractional Share amount entered in the stock split transaction.


Merger Transaction, for clubs with fewer than 100 shares, who tendered all of those shares.

The merger transaction can be entered by going to Transactions > Merger, or Accounting > Securities > Merger, depending on which accounting system you are using. Following are the details needed for the merger:

  • Date: 7/14/2015
  • Old Security: Danaher
  • Old Security Price Per Share: Use the price from your last valuation.
  • Cash Received: Enter any cash received as part of the split-off
  • New Security: NetScout (NTCT)
  • Shares Received: 2.4 x (#of Danaher shares exchanged; don't forget to include fractional shares)
  • Price Per Share: 37.50 (Average of opening and closing price on 7/14/2015)