The deadline in the offer is never the one that binds

Every tender offer prints an expiry on its front page. Two of our own trades this week show that the dates which decide the outcome are set somewhere else: by the broker, which stops taking instructions early, and by settlement, which decides who is on the register when eligibility is counted. One of them cost us the trade we bought for.

This week’s funnel: 11 filings and headlines caught in seven days → 6 live offers reachable at our broker → 1 new (Medtronic).

The lesson

How the broker’s cutoff and the record date work

An offer’s expiry is the moment the depositary, the agent collecting shares for the buyer, stops accepting them. Almost nobody tenders to the depositary directly. The shares sit with a broker, the broker sits inside a central depository (DTC in New York, CREST in London), and each link needs time to collect, net and pass on instructions. So the broker closes first, and the offer documents say so in a sentence most readers skip:

The gap has no rule behind it. Through one broker it has been four hours, two days and two days, and it appears in no offer document: the only source is the broker’s own corporate-action notice, published after the offer opens. Even the offer’s own dates can move. On 17 September Medtronic filed an amendment to correct “a typographical error” in its guaranteed-delivery deadline, which now reads “5:00 p.m., New York City time, on the second New York Stock Exchange trading day after the date of execution”.

The same plumbing sets a second date, at the other end. A US tender lets whoever holds the shares at the cutoff tender them. A UK trust tender often fixes eligibility on a register date instead, and a register counts only shares that have settled. Lindsell Train’s tender is open to shareholders “in respect of Shares held by them on the Tender Record Date”: 6 p.m. London on Monday 14 September. London settles two business days after the trade.

Issue #2 missed this, and so did we. We bought the 260 shares for the tender, and they settled two days after the register was counted. The position is now an ordinary holding in a trust at a discount, and the route to 95% of net asset value is closed to these shares. It has cost nothing yet (Friday’s 590p is above our 578p average), but it is no longer the trade we described.

Two earlier lessons apply to every case below: odd-lot priority (issue #1) and the Canadian paid-up-capital test (issue #2). This week’s lesson has its own guide: broker cutoffs and record dates.

This week’s situations

Live offers with terms and a deadline, each worked through with the same arithmetic.

Gross = (offer − price) ÷ price, on the part of the position the offer takes up. Annualised = gross ÷ days to expected cash × 365, for that trade only — not a yearly or portfolio return.

The execution table

What the broker and the plumbing actually do

Not what a deal pays: what happens to an instruction on its way to the depositary. Every cell was seen in our account or read in the offer document.

The pattern after seven deals: the broker’s cutoff runs from hours to two days before the expiry, and where a record date exists, it runs on settlement, two business days before the date on the page.

The dates that matter · New York time

Killed, and why

US fund self-tenders, for a non-US taxable account. Virtus NFJ (25% at 99% of net asset value, expires 5 Oct 17:00 New York), XAI XFLT (12.5% at 98% of NAV, expires one minute after 11:59 p.m. New York on 19 Oct) and Herzfeld HERZ (5% at 97.5% of NAV, expires 15 Oct 17:00 New York). All three are pro rata, none gives odd lots priority, and all three warn of US withholding for non-US holders. NFJ puts it plainly: “The Fund may withhold 30% of the proceeds otherwise payable to a Foreign Shareholder.” At Friday’s prices the tendered slice is worth 17.0% more than the market in XFLT (98% of the $22.95 NAV of 11 Sep, against $19.23) and 19.3% more in HERZ (97.5% of the $19.13 NAV of 31 Aug, against $15.64); 30% of the proceeds is larger than either. None of this applies to a US taxable holder. Next time: read the paragraph on non-US shareholders before the discount.

Iveco. Friday’s €14.106 close is above Tata’s €14.10 offer, which includes the dividend. Nothing is left to capture. A market above the offer is pricing something else, usually a higher bid.

Computer Modelling Group. A C$4.00–4.50 Dutch auction on the TSX, expiring Monday 21 Sep at 17:00 New York. Friday’s close was C$4.00, the floor. We never read its paid-up-capital sentence, because the circular is filed only on Canada’s SEDAR+, and a broker cutoff up to two days early has probably passed. Next time: the tax sentence gets read the week a bid opens, not the week it closes.

Clywedog Therapeutics (formerly Beacon Topco). A fixed-price tender at $6.6609 with odd-lot priority, expiring 29 Sep 17:00 New York. Our broker had no contract for the new line on 20 Sep, so it can be neither priced nor traded here, and the document warns of 30% withholding for non-US holders.

Lindsell Train, for anyone who bought after 10 September. The lesson above.

Priority Income Fund. The tender is for common shares that “are not currently traded on an established trading market”; the listed lines are preferred shares.

And the noise. Two of the week’s eleven rows were Docebo’s final results for a bid that closed on 8 September, re-published as news. One was Precision Drilling’s normal course issuer bid, an open-market buyback with nothing to tender into.

The book — our own money

Open: ABUS 99 at $5.05, tendered at the purchase price · ARI 300 at $6.92 · Oma 300 at €17.07, elected for cash at €17.20 · Delivery Hero 50 at €37.04 · Lindsell Train 260 at 578p, bought for the tender and not eligible for it.

Closed this week: no special-situation position. Realised losses to date, from the broker’s records: Air Canada −C$24.95, sold 11 September; Zevia −US$323.10, sold 10 September.

Editor’s view: the Lindsell Train mistake is cheap so far and expensive in principle, because we read a register date as if it were a trade date.

Every closed position, losses included: https://99shares.org/scoreboard/

99 Shares is education and information, not advice. It explains how special situations work, using live filings as examples; it does not know your circumstances and does not tell anyone what to buy or sell. We hold or intend to hold positions in situations we write about, and we say which. Every number traces to a primary filing or a broker quote, and we print the date when the number is not from today. Terms of use.

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