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How should the merger of CVS and Aetna be entered?

markisgold

Merger CVS and Aetna

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NotACPA

Which Q product are you running? And which security do you hold?

Also, what are the terms of that merger?

markisgold

Quicken Windows, fully updated. I held shares of Aetna. Don’t understand enough to describe merger terms... it’s public information.

NotACPA

Quicken Windows, fully updated. I held shares of Aetna. Don’t understand enough to describe merger terms... it’s public information.

See Quicken Help (F1), which covers this in it's Investment info.

BUT, without knowing the terms of the merger, no one is going to be able to provide precise instructions.

And, if it's public info, you should be able to look it up on Aetna's website.

Tom Young

The transaction is fully taxable to you. Per the S-4 that you received:
------------------------------------
"The exchange of Aetna common shares for the merger consideration
pursuant to the merger will be a taxable
transaction for U.S. federal income tax purposes. Accordingly, an Aetna
shareholder that is a U.S. holder (as defined in “Aetna Proposal I:
Approval and Adoption of the Merger Agreement and CVS Health Proposal I:
Approval of the Stock
Issuance—Material U.S. Federal Income Tax Consequences”) will recognize
taxable capital gain or loss in an amount equal to the difference, if
any, between (i) the sum of (x) the amount of cash, including cash in
lieu of
fractional shares, received by such U.S. holder in the merger and
(y) the fair market value of the shares of CVS Health common stock
received by such U.S. holder in the merger and (ii) such U.S. holder’s
adjusted tax basis in the
Aetna common shares exchanged therefor."
------------------------------------

The transaction details are:
------------------------------------
"Under the terms of the transaction, each outstanding share of Aetna
common stock is being exchanged for $145.00 in cash and 0.8378 shares of
CVS Health common stock. CVS Health is not issuing any fractional
shares in the transaction. Instead, the total number of shares of CVS
Health common stock that each Aetna shareholder is entitled to receive
is being rounded down to the nearest whole number, and each Aetna
shareholder is entitled to receive cash for any fractional share of CVS
Health common stock that the Aetna shareholder is otherwise entitled to
receive."
------------------------------------

So first you book your sale. Enter as "sales proceeds" the number you get by (# of shares tendered x .8378 x per share "fair market value of CVS after the close) + # of shares tendered x $145.00). You can develop your own "fair market value number based on CVS's per share price range at the date of the close:

Open Hi Low Close
Nov 28, 2018 $80.62 $81.65 $79.78 $80.27

At some point CVS will post on their website their on opinion of the per share FMV to use, but you're free to develop your own. This entry will put a big slug of cash in your Account.

Then book your purchase of CVS on the date of close as: (# of shares owned - includes fraction x per share FMV used above). That will leave your Account cash at the $145.00 per share of Aetna tendered.

Finally, sell that fraction of a share at whatever price is suggested by the cash in lieu you receive.

markisgold

Thanks so much for the detailed info. I actually think that I understood it and will try and make the entries tomorrow. I’m not a big market maven so this was all new to me.

Thanks again,

Mark