Proctor & Gamble split off Galleria, effective September 29, 2016 in a transaction meant to be tax-free to its shareholders. Galleria then merged with Coty (COTY) effective 10/1/2016. This split-off was not mandatory for PG shareholders. PG shareholders were required to voluntarily tender a number of PG shares to participate in the split-off. The number of shares tendered was determined by the shareholder. If the tender offer was oversubscribed the number of shares participating in the exchange was subject to proration. The final proration factor was .1501. Fractional shares of PG were not exchanged. The number of shares exchanged was the number of PG shares tendered multiplied by the proration factor; this was then rounded to the nearest whole share.
This transaction will require a simple spinoff transaction in the accounting software followed by a reverse split of PG. Finally, a simple merger will complete the transaction. The information below is based on the information available from a special Proctor & Gamble web site devoted to this transaction. The prospectus is included on this web site at https://www.dfking.com/pg/.
The Spinoff Entry
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_spinoff
Here is the information you need to complete the spinoff.
This spinoff requires a few calculations before starting the entries.
The actual shares exchanged depend on the shares tendered and the proration factor.
PG shares exchanged = PG shares tendered x (.1501). Round the result to nearest whole share.
For example, 100 shares were tendered so the final shares exchanged are 15.
100 x .1501 = 15.01. 15.01 rounded to nearest whole share = 15.
If you owned less than 100 shares before the tender offer, the shares you tendered were not subject to proration. All shares tendered would be exchanged.
Shares received = PG shares exchanged x 3.9033
For 100 PG shares tendered = 15 PG shares exchanged.
Shares received = 15 x 3.9033 = 58.5495
The Remaining Basis Percentage may be different for each PG shareholder. The value of the remaining basis is the ratio of shares kept to shares before the exchange.
For example, assume a total PG position before transaction of 200 shares. One hundred shares were tendered and 15 exchanged. Total shares after the exchange = 200-15=185. The Remaining Basis Percentage would be 185/200 = .925. The entry amount would be 92.5.
Since Galleria never traded, it does not have a ticker symbol. For myiclub.com users a ticker symbol may be required to make the entries. I use GALLR. This ticker is currently not in use.
Select Parent Security (or Parent Company) : Proctor & Gamble (PG)
Remaining Basis Percentage: ratio of PG shares after exchange to PG shares owned before exchange multiplied by 100. ([PG after exchange/PG after exchange] x 100) See discussion above.
Cash received: (You should not enter anything here.)
Spinoff Security (or Symbol of New Company) : Galleria Corp (GALLR)
Shares received : 3.9033 x (# of PG shares actually exchanged) (Remember to include fractional shares.)
For example, if you exchanged 100 PG shares, you should receive 3.9033 x 100 = 390.33 GALLR shares.
Price Per Share : 23.50 (Closing price of COTY on 9/30/16. Galleria shares will be converted
to COTY shares)
Save the transaction and the spinoff has been entered.
The PG Reverse Split Entry
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.
Security : Proctor & Gamble (PG)
Split Ratio : (new share amount) for old PG share amount
For the example about of 200 shares owned with 15 exchanged resulting in 185 PG shares owned after the exchange this ration would be 185 for 200.
Cash for Fractional Share : You should not have anything to enter here.
Save the transaction and the reverse split has been entered.
The Merger Entry
The final portion of this transaction is the merger of Galleria with Coty.
Go to Transactions > Merger or Accounting > Securities > Record merger of securities depending on the version of the software being used. 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.
Old Security or Merging Company: Galleria Corp (GALLR)
Price per share of old Security / SII: 23.50
Cash received: See your broker statement for cash-in-lieu
New Security: Coty (COTY)
Shares received : 1. x (#of Galleria shares received in the PG exchange)
(Remember to include fractional shares.)
For example, if you received 390.33 shares of Galleria, you should receive 390.33 COTY shares. The number of Galleria shares received in the PG exchange is (PG shares exchanged x 3.9033). The number of PG shares exchanged was the # of PG shares tendered x .1501 with the result rounded to the nearest whole share. If you owned less than 100 PG shares your tendered shares were not subject to proration.
Save the transaction and all transactions related to the PG exchange are completed.
NOTE: If you have multiple purchases of PG, your broker may exchange shares on a First-in-first-out (FIFO) basis. The software currently does not have a mechanism to choose blocks for a split-off transaction. The software will allocate exchanged shares proportionally from all blocks. Your cost basis and the cost basis recorded by your broker may then differ. Such a difference is not significant. Partnership tax returns have specific areas to reconcile these usually small differences. ICLUBcentral tax printer software automatically fills in these adjustments in the normal operation of the software using the data imported from your accounting records and that you enter from your 1099.