Dale, here's a candidate for the thread. It's an arbitrage situation:
The two companies involved are PFSWeb Inc.(PFSW) and Daisytek Int'l.(DZTK). Daisytek, the parent company, owns 80.1% of PFSW, and will spin off all the shares to its shareholders in mid-2000. Some numbers:
PFSW--
Number of shares: 17,405,000
Market cap(at a price of $36.938): $642,905,890
80.1% of the shares: 13,941,405
80.1% of market cap: $514,967,618.
DZTK--
Number of shares: 17,365,000
Market cap(at a price of $20.50): $355,982,500
As you can see, its ownership position in PFSW is over 44% the value of the parent company alone. If each of the PFSW shares will be spun off to DZTK holders, that comes to:
13,941,405 PFSW shares owned
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17,365,000 DZTK shares outstanding
...equals 0.80 shares of PFSW for each share of DZTK owned. That means each share of DZTK has currently $29.50 in value of PFSW shares. Or put another way, DZTK is being priced at -$9.00. Yes, that's right, it's a negative nine dollars.
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SPIN-OFF FROM DAISYTEK
Daisytek's Plan to Spin-off PFSweb
After completion of this offering, Daisytek will own approximately 82.2% of the outstanding shares of our common stock, or approximately 80.1% if the underwriters exercise their over-allotment option in full. Daisytek has announced that it plans to complete the spin-off of our company sometime in mid-2000 (and within one year of the closing of this offering) by distributing all of the shares of our common stock it then holds to its stockholders. We refer to this distribution as the "spin-off."
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FYI...
Rainier
Disclosure: Long DZTK |
