Handling UTX to CARR/OTIS Spinoff and RTN/UTX to RTX Merger?

I happen to have one investment account with Raytheon Company (RTN) in it and another investment account with United Technologies Corp. (UTX) in it. I'm documenting how I'm planning to handle UTX's spinoff of both Carrier Global Corp. (CARR) and Otis Wordwide Corp. (OTIS) and the merger of RTN and UTX to Raytheon Technologies Corp. (RTX). Both of those happened on 03 April 2020. Hopefully, someone will correct anything wrong. Also, maybe this will help others in a similar situation. Note: IANAL, so don't take anything I say as gospel.

It looks like the merger happened after the spinoff, so I'm handling the spinoff first. Note that the spinoff means that at the end, for every share of UTX you started with, you'll finish with 1 share of UTX, 1 share of CARR and 0.5 shares of OTIS (no fractional shares given - any fractional shares will be distributed as cash). Quicken has an Easy Action for Corporate Spinoffs, but it's set up for spinning off just one company. Since UTX is spinning off two companies, it has to be done manually. Here's a Quicken Help document for doing that:

https://www.quicken.com/support/tracking-corporate-spin-multiple-subsidiaries

Below, I've modified the example from that help page for this spinoff.

1) Assuming you hold 1,000 shares of UTX at $86.01 per share (closing price of UTX on 02 April 2020 > Cost Basis is $86,010). UTX spins-off companies CARR and OTIS. You receive 1000 shares of CARR with a Cost Basis of $13,280 (closing price of CARR on 02 April 2020 was $13.28 x 1000 shares). You receive 500 shares of OTIS with a Cost Basis of $22,000 (closing price of OTIS on 02 April 2020 was $44.00 x 500 shares). You must reduce the Cost Basis of UTX by $35,280 ($13,280 + $22,000) without reducing the number of shares.

2) Enter a RtrnCap allocated to UTX for the value of CARR and OTIS ($35,280). This will decrease the Cost Basis of UTX without decreasing the number of shares.

3) Since this increased your cash balance, enter Buy Transactions for each of the subsidiaries: 1000 shares of CARR with a Cost Basis of $13,280 and 500 shares of OTIS with a Cost Basis of $22,000. As you enter these transactions, let Quicken calculate the price per share. After the Buys are recorded, the cash balance should be back to the amount prior to step 1.

4) Edit the price history for CARR and OTIS and enter their closing prices for the day of the spin-off ($13.28 and $44.00). This will update the market value for each of the subsidiaries.

Now for the RTN/UTX > RTX merger. For that, I assume I can use the Corporate Acquisition (stock for stock) Easy Action. Here's the Quicken Help document for that:

https://www.quicken.com/support/how-do-i-record-corporate-acquisition-stock-stock

Each share of RTN will convert to 2.3348 shares of RTX and each share of UTX will convert to 1 share of RTX. Since I own shares of each, I'll have to do two of these. The fields will be:

Company acquired: Raytheon Company (RTN) and United Technologies Corp. (UTX)
Acquiring company: Raytheon Technologies Corp. (RTX) in each case.
New shares issued: 2.3348 for RTN and 1 for UTX.
Price per share for acquiring company: $51.00 (03 April 2020 opening price for RTX).

Again, this is what I'm planning to do. If anyone sees anything wrong, let me know. Thanks.

Comments

  • isonclubikin
    isonclubikin Member ✭✭✭
    I can't seem to edit my OP ("Format Not Found"). So..., since no fractional shares will be given at any stage of the above, I'll add in a Sell transaction for those whenever they occur (given my real number of shares). Does anyone know if those will need to take place the day before the spinoff/merger (i.e., 02 April 2020) or the day of the actions (i.e., 03 April 2020)? If the day before, would the price be the closing price? If the day of, would the price be the opening price?
  • isonclubikin
    isonclubikin Member ✭✭✭
    My best thought for the share prices to use in the "sale" of partial shares from my OP is that they should be the closing price the day before it happens. But, that causes me to worry about the "Price per share for acquiring company" I used in the "Corporate Acquisition" phase of things. Now I'm leaning towards using the closing price of RTX the day before the merger ($54.13).
  • tvicki
    tvicki Member ✭✭
    Just for info there are 3 other discussions on this subject:
    United Technologies (UTX) Spin Off and Merger?
    How to treat UTX and RTX shares
    Whats the best way to handle the United Technologies merger^& Otis Carrier Spinoffs?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
This discussion has been closed.