Perrigo merger with Elan
Perrigo completed its merger with Elan Corporation on 12/18/2013 for Perrigo stock and cash. As part of the merger Perrigo changed its country of residence to Ireland.
The SEC filing for this merger can be found through the Perrigo web site at:
https://www.rrdezproxy.com/~webdrop/ezproxy/201310/Proxy_Pros_PERRIGO_58718_008_BMK.pdf
This merger, due to the change of country of incorporation, is a fully taxable transaction. This means to get the proper holding period and cost basis this transaction can be treated as a sale of old Perrigo stock for the value of the new Perrigo shares and cash received followed with a purchase of new Perrigo shares. This is true for both old Perrigo shareholders and Elan shareholders. The information below is based on the information available from the S-4 filed with the SEC. Price information is from websites offering historical prices.
The price of Perrigo shares on 12/18/13 is 153.45 at opening, 155.67 at close and 154.56 is the average of the opening and closing price.
Here is the information you need to complete the merger for Perrigo shareholders.
The Sell transaction
Date: 12/18/2013
Security: Perrigo (PRGO)
Shares sold : Sell all shares
Sale Total : This will depend on the value you want to use for the new Perrigo plc stock.
Using opening price of 153.45 on 12/18/13 the total will be 153.46 x (# of Perrigo shares)
(One shares of new Perrigo at $153.45 plus $.01 cash)
For example for 100 shares this would be 153.46 x 100 = 15346.00
Commissions and fees : Check your broker statement for any reorganization fees charged.
The Buy Transaction
Date: 12/18/2013
Security: Perrigo plc (PRGO) (A new security profile for the new Perrigo plc shares may be useful)
Shares purchased: Use the same number as sold in the previous transaction
Net total: (# of new Perrigo plc shares received x same price per share used for the sale above)
Using the opening price again and 100 shares from above, the Net total would be
(153.45 x 100) = 15345.00
Here is the information you need to complete the merger for Elan shareholders.
The Sell transaction
Date: 12/18/2013
Security: Elan Corporation (ELN)
Shares sold : Sell all shares
Sale Total : This will depend on the value you want to use for the new Perrigo plc stock.
Using opening price of 153.45 on 12/18/13 the total will be 17.9674 x (# of Elan shares)
.07636 x 153.45 = 11.7174 .07636 PRGO per ELN share at 153.45 per PRGO share
Plus 6.25 cash per ELN share Total value per ELN share = 17.9674
For 100 shares of Elan this amount would be 100 x 17.9674 = 1796.74
Commissions and fees : Check your broker statement for any reorganization fees charged.
The Buy Transaction
Date: 12/18/2013
Security: Perrigo plc (PRGO)
Shares purchased: This is .07636 x (# of Elan share originally held)
For example for 100 shares of Elan this would be 100 x .07636 = 7.636
Net total: (# of new Perrigo plc shares received x same price per share used for the sale above)
This would be 7.636 x 153.45 = 1171.74
Please note: It is probable that only whole shares will be distributed. In this case, round down the number of shares bought to the whole number only, to 7 in the example above. The Net total for the purchase would then be (Total Value received from the sell transaction) – (total merger cash received) – (cash-in-lieu of fractional shares).
For the example above the Total value of the merger consideration for 100 Elan shares was 1796.74. The cash portion of the merger consideration was 6.25 per Elan share or 625.00 total.
The cash-in-lieu amount will be on the broker statement. It should be in the neighborhood of 97.50 (153.45 x .636 = 97.59). The broker may sell the fractional share at a different price.
Net Total is now (1796.74 – 625) – broker’s cash-in-lieu reported = 1171.74 – (reported cash-in-lieu).
By entering these as a sale and then a buy transaction the taxable gain from changing country of residence and the change in the holding period are accomplished. The merger screen would not make these changes as a simple merger does not have a gain nor a change of holding period