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Help with security after merger

Doug7
Doug7 Member ✭✭
edited January 2019 in Investing (Windows)
I am getting the same message after trying to account for the "merger" of Tyco Intl and Johnson Controls. I used the "Corporate Acquisition - Stock for Stock" option, which seems like the logical method. Can anyone tell me if that is the right way?


Note: This conversation was created from a reply on: For the last few days historical quotes has been downloading a stock split for Ty....

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    This reply was created from a merged topic originally titled Reply to user on another post.


    From the SEC filed prospectus, FAQ section (highlights added):

    Q:  WHAT IS THE PROPOSED TRANSACTION? 

    A:  On January 24, 2016, Johnson Controls and Tyco entered into the merger agreement pursuant to which they agreed to combine their respective businesses under a single company.
      The merger is structured as a "reverse merger," in which Johnson Controls will merge with an indirect wholly owned subsidiary of Tyco, with Tyco being the parent entity of the combined company. Following the merger, Tyco will change its name to "Johnson Controls International plc" (subject to the approval of the Registrar of Companies in Ireland) and is referred to as the "combined company." In the merger, each share of Johnson Controls common stock (other than certain shares described in the merger agreement) will be converted into, at the election of the holder of such share, either: (i) one ordinary share of the combined company (the "share consideration"); or (ii) $34.88 in cash, without interest (the "cash consideration"). Elections by Johnson Controls shareholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Johnson Controls shareholders will receive in the aggregate approximately $3.864 billion in cash.Immediately prior to the merger, Tyco shareholders will receive 0.955 ordinary shares of Tyco, which will become ordinary shares of the combined company in the merger, for each Tyco ordinary share they hold. Tyco shareholders will receive these shares by virtue of a 0.955-for-one share consolidation (the "Tyco share consolidation"). After consummation of the merger, Johnson Controls shareholders and Tyco shareholders are expected to own approximately 56% and 44%, respectively, of the issued and outstanding ordinary shares of the combined company.
    So which company did you start with.  For the Johnson shareholder, it looks like a Corporate Acquisition 1:1 share ratio or like a sale of the holding for the $34.88/share.  

    For the Tyco owner, I think I would be looking at:
    1. Reticker my original Tyco to TYCO(old)
    2. Create a new Tyco Int'l plc security with TYCO ticker
    3. Have the new Tyco acquire (Corporate Acquisition) the old Tyco at the 0.955:1 rate.  
    If the old Tyco and the new Tyco are trading at about the same rate (which seems to be the case), I would consider just the simpler stock split transaction.  There may still be an issue with downloads in that case as the CUSIP number is likely changing for the holding.  

    (Caveat:  I am not a tax or investment pro, nor do I own either of these companies myself.  I have no horse in the race.)

    Note: This conversation was created from a reply on: For the last few days historical quotes has been downloading a stock split for Ty....
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:

    This reply was created from a merged topic originally titled Reply to user on another post.


    From the SEC filed prospectus, FAQ section (highlights added):

    Q:  WHAT IS THE PROPOSED TRANSACTION? 

    A:  On January 24, 2016, Johnson Controls and Tyco entered into the merger agreement pursuant to which they agreed to combine their respective businesses under a single company.

      The merger is structured as a "reverse merger," in which Johnson Controls will merge with an indirect wholly owned subsidiary of Tyco, with Tyco being the parent entity of the combined company. Following the merger, Tyco will change its name to "Johnson Controls International plc" (subject to the approval of the Registrar of Companies in Ireland) and is referred to as the "combined company." In the merger, each share of Johnson Controls common stock (other than certain shares described in the merger agreement) will be converted into, at the election of the holder of such share, either: (i) one ordinary share of the combined company (the "share consideration"); or (ii) $34.88 in cash, without interest (the "cash consideration"). Elections by Johnson Controls shareholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Johnson Controls shareholders will receive in the aggregate approximately $3.864 billion in cash.Immediately prior to the merger, Tyco shareholders will receive 0.955 ordinary shares of Tyco, which will become ordinary shares of the combined company in the merger, for each Tyco ordinary share they hold. Tyco shareholders will receive these shares by virtue of a 0.955-for-one share consolidation (the "Tyco share consolidation"). After consummation of the merger, Johnson Controls shareholders and Tyco shareholders are expected to own approximately 56% and 44%, respectively, of the issued and outstanding ordinary shares of the combined company.
    So which company did you start with.  For the Johnson shareholder, it looks like a Corporate Acquisition 1:1 share ratio or like a sale of the holding for the $34.88/share.  

    For the Tyco owner, I think I would be looking at:
    1. Reticker my original Tyco to TYCO(old)
    2. Create a new Tyco Int'l plc security with TYCO ticker
    3. Have the new Tyco acquire (Corporate Acquisition) the old Tyco at the 0.955:1 rate.  
    If the old Tyco and the new Tyco are trading at about the same rate (which seems to be the case), I would consider just the simpler stock split transaction.  There may still be an issue with downloads in that case as the CUSIP number is likely changing for the holding.  

    (Caveat:  I am not a tax or investment pro, nor do I own either of these companies myself.  I have no horse in the race.)

    Note: This conversation was created from a reply on: For the last few days historical quotes has been downloading a stock split for Ty....
    I was sloppy with the end of my comment.  Johnson Controls, JCI, is the continuing company, not Tyco.  Thus there is no need to do the three steps I outlined for the Tyco shareholder.

    For the Johnson Controls shareholder who did not take the cash buyout, I would likely just rename the security to Johnson Controls Int'l, plc.  

    For the Tyco shareholder, I would likely
    1) create the Johnson Controls Int'l plc security if it did not already exist for my data.
    2) do the Corporate Acquisition with the new Johnson Controls Int'l aquiring the Tyco shares at the 0.955:1 rate.     
  • QCoach
    QCoach Member ✭✭
    edited September 2016
    Note: for Johnson Controls shareholders, it wasn’t just a
    change in security.  This was an Inversion
    and JCI is now an IRE company.  Thus, it’s
    treated as if JCI(-old) was sold and you now own JCI (new).

    To make it more complicated there was an exchange and a Cash
    Disbursement.  For every JCI-OLD you now
    have .8357 shares of JCI -new and $5.7293 in cash.  Per my broker, you recognize Cap Gains on
    your old stock and your new Basis is the Average price on 9/6 which was $48.11
    (Company provided).  Thus, this is a step
    up and a taxable event.

    To handle in Quicken I did 3 things:

    1.      
    Sold small fraction for the “Cash in Lieu”

    2.      
    Sold the Balance of JCI-Old for the NEW BASIS +
    the Cash Distributed.

    3.      
    BOUGHT JCI-New at the New Basis.

    Note: All the things that came in via Direct Connect were
    basically useless and I deleted them.

    Resources:

    http://api40.10kwizard.com/cgi/convert/pdf/TYC-20160906-8K-20160901.pdf?ipage=11125928&xml=1&...

  • Dana
    Dana Member ✭✭
    edited October 2017
    Wow, this was VERY helpful. In 2., do you mean the entire balance of the JCI-old? How does that work for the gain recognition?
    Thanks!
This discussion has been closed.