Global Payments completed its merger with Heartland Payments 4/22/2016 for cash and Heartland Payments stock. Global Payments posted the SEC filing concerning this merger on the Investor relations portion of their web site.
Choose the form S-4/A dated March 21, 2016.
If you have made any entries for this transaction before reading these steps, we suggest to delete them before continuing.
This FAQ is separated into two sections, depending on if you are using the online accounting at myICLUB.com, or the desktop Club Accounting 3. The steps for myICLUB are presented first, followed by steps for the Desktop Club Accounting.
Use the Merger with cash transaction.
Step 1
Step 2
To record this merger will require multiple entries in the accounting software. The basic outline of these entries is given below:
The capital gain realized is limited to the actual cash received so some clubs may need to adjust the capital gain amounts before entering the capital gain distributions. Instructions for doing this are included. The total merger consideration is $102.289 per Heartland Payments share. Your capital gain will be based on this total consideration with a limit that the total capital gain cannot exceed the total cash received, excluding cash-in-lieu of fractional shares.
Due to the calculations required to enter this merger in the desktop Club Accounting, we have put together a spreadsheet, which can be used to keep track of the figures needed for the merger.
Before continuing, we suggest to download a copy of the spreadsheet by clicking here.
1. Calculate the capital gain.
The total merger consideration is $102.289 per Heartland Payments share. This is $53.28 in cash and $49.009 in Global Payments shares. Calculate the total value received for your Heartland Payments shares by multiplying 102.289 by the total shares of Heartland Payments owned. This must be done on a block by block basis.
Total Proceeds = [102.289 x (# of Heartland Payments shares owned in each block)]. (Do this calculation for each block of shares.)
Write down the total proceeds amount on paper or spreadsheet for each block of Heartland Payments shares owned. From the total proceeds subtract the cost basis of that particular block. This will give you the gain for each block of Heartland Payments shares using the total proceeds. Ignore any blocks with a loss. The cost basis can be found by starting a partial sale of Heartland Payments. A block selection screen will appear with the date purchased, number of shares and current cost basis for each block. Copy this information into the spreadsheet (if you have downloaded it) or on a sheet of paper, then cancel the sale.
If you are using the spreadsheet, you can now skip the next two paragraphs, and go directly to the Accounting for Cash Received section.
Calculating the cash received for each block, for those blocks with a capital gain:
Next calculate the cash received for each block, for those blocks with a capital gain. The equation for this is [53.28 x (# of Heartland Payments shares owned in each block)]. For each block compare the cash received for that block with the capital gain calculated previously for that block. The smaller of the numbers is your gain from that block. Remember to ignore any blocks with a calculated loss using the total proceeds equation. Once you have the adjusted capital gain for each block with a gain, which is the smaller of a) the cash received or b) the total proceeds gain, add all the gains from each block with a gain. This will be your total capital gain for this merger. Remember to differentiate between short term and long-term gains. (Check the purchase date of each block and compare it to the merger completion date of 4/22/2016.)
You should now have a figure for long-term and short-term capital gains recognized from this merger. If this amount is less than the total cash received, not including cash-in-lieu for fractional shares, then subtract the sum of your capital gains from the total cash received. This will be [53.28 x (total # of Heartland Payments shares owned)] – (sum of capital gains). This amount will be entered as a return of capital.
2. Accounting for Cash Received
All of the following entries use the cash dividend screen, in CA3 this is Transactions > Cash Dividend or Distribution.
3. The Merger
Go to Transactions > Merger. If you are unfamiliar with merger transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_merger
Here is the information you need to complete the merger.
(Remember to include fractional shares.)
Save the transaction and the merger will be complete.
Below is a a worksheet you may wish to use, to help keep track of figures related to entering this merger.
A. Total Proceeds received.
102.289 x (# of Heartland Payments shares in block) = ____________________________
B. Total cash received.
[53.28 x (# of Heartland Payments shares in block)] = ________________
C. Cost Basis of this block of Heartland Payments shares _______________ (from accounting records)
D. Total Proceeds LTCG = _____________________ (A-B) fill-in D or E as appropriate
E. Total Proceeds STCG = ____________________(A-B) fill-in D or E as appropriate
F. Actual LTCG ___________________ (the lessor of B or D.)
G. Actual STCG ____________________(the lessor of B or E.)
H. LTCG + STCG = __________________.
I. Return of Capital amount = (Total Cash Received) – (LTCG + STCG) = ______________
Use this if (LTCG + STCG) is less than Total Cash received.
J. Shares of Global Payments Received = .6687 x (# total of Heartland Payments shares owned) = _________________. (For the merger transaction)
