So Caterpillar (CAT) wants to offer shareholders who own less than 100 shares the option to round up to 100. When I got the notice I hoped that this would be at some kind of minor discount to the market price. Why else would I want to do that, right?
HOLDERS ALSO HAVE THE OPTION OF ROUNDING UP THEIR HOLDINGS TO EXACTLY 100 SHARES. HOLDERS ELECTING THE ROUND-UP OPTION WILL BE CHARGED THE ESTIMATED PURCHASE PRICE OF $95.00 PER SHARE PURCHASED. A PROCESSING FEE OF $2.00 PER SHARE PURCHASED (UP TO A MAXIMUM OF $50.00 PER ACCOUNT) WILL BE DEDUCTED TO DEFRAY THE COST OF THE PROGRAM.
Apparently not, there must be some idiots out there would would pay between 95-97$ for a stock whose current market price is less than 90$! The strange part is that the 95$ price is estimated. The weird part is that CAT will also give you the option to sell your shares back to them. However, in this case there is no premium:
CATERPILLAR INC. IS OFFERING TO PURCHASE ALL SHARES OF ITS COMMON STOCK FROM SHAREHOLDERS OWNING LESS THAN 100 SHARES (99 SHARES OR LESS) AS OF RECORD DATE NOVEMBER 26, 2012. SHAREHOLDERS WILL RECEIVE THE WEIGHTED AVERAGE MARKET PRICE PER SHARE TENDERED, THE DAY THE SHARES ARE SOLD BY THE AGENT. A PROCESSING FEE OF $2.00 PER SHARE UP TO A MAXIMUM OF $50.00 PER ACCOUNT WILL BE DEDUCTED TO DEFRAY THE COST OF THE PROGRAM.
Really? $2/share and market price. Not 95$? Thanks but no thanks. I’ll pass.
Disclosure: Long CAT.