I bought YUM stock way back when it got a favourable write up by the Motley Fool, it has gained and paid dividends steadily since.Recently I received a notice: ‘Review - Voluntary Corporate Action’ for a ‘Tender Offer’It seems that YUM does not like people to have less than 100 shares or if they have more than 100 shares but not full, round numbeers (I currently own 236 shares) I need to buy enough shares to round out the next full 100 - or else?Not exactly sure about that and whether or not I should buy the shares to bring them up to a full 300.Is it a good or bad sign that they are doing this I am wondering?I could not find a board for this stock so I am here to ask this question in the hope that somebody is familiar with the stock, the offer and whether or not this is a good thing?Since I have been procrastinating over this (did not want to look at my portfolio lately 😐) I need to take action before November 28th.Thank you very much in advance and Happy Thanksgiving!Gabi
Is the tender offer price above or below the current market price? If higher, it might cost less to purchase additional shares on the open market for your regular transaction fee rather than th3 much higher reorganization fee your broker would charge for accepting the offer. FuskieWho has never heard of s company pressuring shareholders to round up to a minimum number of shares...-----Ticker Guide for The Walt Disney Company (DIS), SodaStream (SODA), Live Nation (LYV), CME Group (CME), Mongo DB (MDB)Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate adviceDisclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)Fool Code of Conduct: http://tinyurl.com/FoolCodeWarning: This post was created on mobile device and is subject to autocorrect.
FuskieWho has never heard of s company pressuring shareholders to round up to a minimum number of shares...Fuskie is right. Unless the person has the stock certificate(s) in hand, the issuing company has no idea who really owns the shares. All shares not registered in the name of the owner are, in fact, owned by Cede and Company, most likely in round lots. When a brokerage client purchases a stock, the brokerage house might just notify The Depository Trust & Clearing Corporation (DTCC) of the purchase because the DTCC is the clearing house for all stock (and bond) transactions. Then the DTCC would just change an entry on their books, making the brokerage house the beneficial owner of the stock instead of the previous brokerage house. All the certificates owned by Cede and Company are presumably in their vault at 55 Water Street in NYC.All this complexity is to make it possible to execute trades more quickly, without messenger boys on bicycles riding all over Manhattan on bicycles, delivering certificates as they did before 1999 when this system was set up.So the company never heard of the O.P.might because if one client of a brokerage were to buy shares of a company and another one sell the shares, the brokerage house might consolidate the two transactions and do just one action with the DTCC.
Hi Fuskie,Thanks for your post! Here is a copy of the offer:Confirm Global Corporate Action NoticeNov 07, 2018 5:14:50 PM EST 29534224 Voluntary Odd Lot Tender Offer: Action RequiredSecurity Name: Issue Country: ML Security ID: Cusip:ISIN: Sedol: Ticker:INSTRUCTION DEADLINE DATES Final Date for Instructions:TERMSRecord Date: Expiration Date: Offeror Name:OPTIONS Option 1:Principal CashYUM BRANDS INC UNITED STATES 84AB3988498101 US9884981013 2098876YUMNov 28, 2018 15:00 ESTOct 17, 2018Nov 30, 2018YUM BRANDS, INCHolders of 1-24 shares may sell their shares and receive cash at a rate to be determined and will be subject to a processing fee of USD 2.50 per share.Option 2: Principal CashHolders of 25-99 shares may sell their shares and receive cash at a rate to be determined and will be subject to a processing fee of USD 60.00 per account.Option 3:SecurityNew Security Description: CUSIP:ISIN:SEDOL:YUM BRANDS INC 988498101 US9884981013 2098876Holders who wish to purchase 1-24 shares to round up to an even 100 shares, are subject to a processing fee of USD 2.50 per share. A deposit of USD 97.00 per share is required for the purchase of shares.Option 4:SecurityNew Security Description: YUM BRANDS INC CUSIP: 988498101ISIN: US9884981013 SEDOL: 20988761Holders who wish to purchase 25-99 shares to round up to an even 100 shares, are subject to a processing fee of USD 60.00 per account. A deposit of USD 97.00 per share is required for the purchase of shares.Option Default:Default Option: Y TAKE NO ACTIONEVENT DETAILSUPDATE: Option 3 payout has been updated.* ** ** *YUM| Brands, Inc. has announced a voluntary program through which shareholders owning fewer than 100 shares of YUM common stock ( record date 10/17/18) may either 1) sell their shares, or 2) purchase enough additional shares to increase their holdings to 100 shares.On a weekly basis, ending on a Friday, shares submitted for sale will be matched to shares requested for purchase by other participating shareholders. The balance of shares not matched will be traded in the open market throughout the respective week and a few days afterward. A weighted average price will be determined by these market trades for the respective week and that is the actual price shareholders will be paid or will pay. Weighted averaging means the per share price is obtained by dividing the aggregate dollar amount of all market sales ( or purchases) on behalf of such participants during the respective week bythe total number of shares sold ( or purchased) on behalf of such participants during the respective week. To defray the cost of the program, a processing fee of $ 2.50 per share sold or purchased ( up to a maximum of $ 60 per account) will be deducted from your proceeds or purchase deposit. The actual price cannot be guaranteed in advance.The offeror reserves the right to extend this offer. Current market prices should be checked.This offer is subject to various conditions being satisfied and may be amended or terminated under certain conditions.If you are short you can be held liable for any resultant proceeds. If you intend to cover your short position please notify your respective client representative prior to your deadline.To assess the tax consequences of this corporate action, clients should seek professional tax advice.Any instructions received from you will be deemed to constitute a representation and warranty from you that you are eligible to participate in this issue. If requested, you agree to promptly provide proof of eligibility.Instruction DetailsEntries covering the above transaction will be posted to your account.A USD 30.00 per instruction service charge (SVCH) will be assessed by Merrill Lynch to each U.S. dollar denominated account, for which valid orders have been executed, in addition to any fees referenced in the above notification.2Unless a final date to withdraw instructions is shown above, all instructions must be regarded as being irrevocable.IMPORTANT: Funds required for the "round-up" option must be available the day the order is entered; however, the additional shares may be received and credited to accounts after expiration of the program. At that time, accounts will beadjusted (credited or debited) as necessary, to reflect the difference between the initial charge and the actual price.
Thank you, Jean David!Just posted a copy of the offer in my reply to Fuskie above.Just baffled, not sure what to do! Gabi
Well, these things used to be much more common when1) Brokerage fees were high and 2) Odd lots were subject to premium/discount. But the market is really efficient now and cheap to get liquidity so there are almost no circumstances in which making a trade under these circumstances makes sense. If you hold shares directly, maybe it makes sense. The company is attempting to lower the number of small shareholders holding the stock as they can be very expensive for the company to service. So, best to let this tender go without acting. Fool on!Bill
Hi Bill,Thanks for your reply! So I do not have to do anything at all?No repercussions?Was afraid that I would get stuck with exorbitant fees ($2.50 per share 😳), unfavorable rate etc if I don’t do anything.Got this notice through Merrill Lynch who I have my account with under the headline: ‘Action required’ ... Sorry to be so daft but this is the place for foolish questions... 😬Gabi
Not at all, that's why we're here!!the fees are for people who tender their shares. I guess for people who have a full-service broker with a massive cost-per-trade it would make sense to do the tender instead of selling shares on the open market, but otherwise I can't see it.Bill
Thank you Bill,I’ll sit tight and ignore this tender then.Really appreciate your advise!Gabi
Fidelty does that to make people mad. I had the same problem with Regions Financial
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