99 Shares

Guides

Foreign-currency offers: the exchange rate inside the spread

Albert Gasull, editor · 25 October 2026

When a takeover offer is priced in one currency and paid in another, the payment is the offer price divided by an exchange rate taken on a named day, usually after withdrawal rights end. Until that day the gap on the screen is part premium and part currency forecast, and a holder who tenders also holds the offer currency against the dollar on the full value of the position. The number that matters is the break-even rate: the exchange rate at which the offer pays exactly today’s price.

How the mechanism works

  1. The offer price is fixed in the home currency of the company. It does not move.
  2. Shares or ADSs listed in the United States trade in dollars, so their price moves with the home currency as well as with the deal.
  3. The document names a rate series, who publishes it and the day it is read. The dollar payment is the home-currency price divided by that rate.
  4. Any dollar figure printed in the document is an illustration at an earlier day’s rate, not a promise.
  5. The payment section lists what is deducted before the money arrives. Conversion expenses can be one of those items, with or without a figure.

The sentence to look for

The definition of the exchange rate, in the offer document:

“The Applicable Exchange Rate will be the Peruvian Sol/U.S. dollar exchange rate (tipo de cambio contable venta) … published by the Superintendencia de Banca, Seguros y AFP (SBS) on its website on the Expiration Date.”

And, in the payment section, the deductions: “(including expenses related to the foreign exchange conversion)”.

Worked example: Cementos Pacasmayo

Inversiones ASPI, majority holder of the Peruvian cement maker, filed a US tender offer on 21 October 2026, alongside a Peruvian offer in Lima. One ADS is five common shares. The U.S. Offer to Purchase gives the numbers needed:

  1. Offer: S/ 44.65 per ADS (S/ 8.93 per common share).
  2. The filing’s illustration at the 19 October rate: about $12.98. Implied rate: 44.65 ÷ 12.98 = about S/ 3.44 per dollar.
  3. Close on Friday 23 October: $12.73. Gross at that rate: 12.98 ÷ 12.73 − 1 = +1.96%.
  4. Break-even rate: 44.65 ÷ 12.73 = about S/ 3.51. The sol fall that erases the spread: 12.73 ÷ 12.98 − 1 = about 1.9%. Each 1% fall in the sol takes about 1% off the dollar payment.
  5. Per trade: +1.96% ÷ 32 days to 24 November × 365 = about 22.4%, only if the 19 October rate holds to the payment date.

The author’s own 99 ADSs cost $12.6601 each with commissions, $1,253.35 in all. At $12.98 they return $1,285.02, +$31.67 or +2.53%. A 2.5% fall in the sol, to about 3.53 per dollar, takes the payment to about $12.66 an ADS, which is what they cost.

Where it goes wrong

  • Reading the illustrative dollar figure as the offer. The offer is S/ 44.65. The $12.98 is one day’s conversion.
  • Stopping at the spread. The gap on the screen already prices the market’s view of the currency. The risk that remains is the move from today to the rate day.
  • Assuming one rate series. The payment uses the SBS “tipo de cambio contable venta”; the $12.98 illustration uses the “tipo de cambio interbancario promedio”. The document does not say how far apart they are.
  • Assuming one day. Some passages name the rate published “on the Expiration Date”, Friday 20 November; others the rate “on the trading day following the Expiration Date”. Either way the currency risk runs to the end.
  • Ignoring costs named without a number. Conversion expenses are deducted and not quantified. On a spread of about 2%, that is a real unknown.
  • Treating every line alike for tax. A holder outside Peru who tenders common shares owes Peruvian capital gains tax, generally at 30%; “A Non-Peruvian Holder that tenders ADSs will not be subject to Peruvian tax.”

How to check it

  • The offer document states the currency of the price and the currency of payment.
  • The definition of the exchange rate names the series, the publisher and the day it is read.
  • Any dollar figure in the document gives the date of the rate it used.
  • The payment section lists the deductions, including conversion expenses and any ADS fee.
  • The tax section shows whether shares and ADSs are treated differently.

Sources

Author holds: Cementos Pacasmayo, yes, 99 ADSs (25 October 2026). 99 Shares is information, not advice, and nothing here is a recommendation to buy, sell or tender any security. Terms of use.