Does anyone out there own or follow Johnson Controls? I've been web searching for details of what the Johnson Controls / Tyco merger will mean for JCI stockholders. This is my understanding, I would appreciate any confirmation or correction:
1. The merger was overwhelmingly approved, that question is settled.
2. JCI stockholders can choose to take new shares at a 1:1 rate, or tender their shares at $34.88 each in cash. Shares that are not voted will be assumed to be opting for the stock exchange. Either option will be a taxable event.
3. JCI will receive $3.9b cash from Tyco. This will be used to pay the tender offers. If there are not enough tender offers, the remaining cash will be distributed to JCI shareholders on a pro rated basis at the $34.88 rate. The distribution will reduce the share exchange rate.
With Friday's closing price of $43.89 I don't see anyone tendering their shares at $34.88, so this scenario (from the JCI website) is likely to occur:
Essentially, 17.5% of my shares are being "called" at $34.88 if I opt for share exchange or don't vote.
My cost is $37.72 for shares purchased less than 12 months ago so I will lose about 7% on the called shares, plus I'll have some short term capital gains on the exchanged shares.
Is this right? It doesn't seem like a good deal to me. Should I just sell @ $43.89 and wait for the dust to settle?