November 18, 2019 - 1:53am EST by
2019 2020
Price: 142.99 EPS 0 0
Shares Out. (in M): 718 P/E 0 0
Market Cap (in $M): 102,710 P/FCF 0 0
Net Debt (in $M): 3,353 EBIT 0 0
TEV (in $M): 106,063 TEV/EBIT 0 0

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  • Odd-Lot Tender
  • winner


This is a simple idea, and this writeup will be short. It is a small opportunity in the form of an exchange offer, and is best suited for PAs. Bottom line: Invest about $14,000, with the expectation of a profit of about $1,000 in a couple of weeks. If it works as expected, the return is good, but it is not scalable.




Danaher Corporation (DHR) owned 100% of Envista Holdings (NVST) prior to Envista’s IPO in September. Envista sold 30.8 million new shares (including the greenshoe) at the IPO price of $22; the stock is now just under $28. Danaher now owns 80.6% of Envista, about 128 million shares.




Danaher is a diversified conglomerate; Envista is made up of companies that were formerly part of Danaher’s Dental segment. Given the nature of this investment, the financial and business details of the two companies are less important, but you can find information on the companies’ websites and the SEC website.




Danaher has just launched an offer to exchange its 128 million shares of Envista for shares of Danaher. This “split-off” will be a tax-free transaction for Danaher shareholders who participate.




For every $93 of DHR stock that is accepted in the exchange offer, you will receive about $100 of NVST, for an expected gain of about 7.5%. Danaher’s market capitalization is about $102 billion. The 80.6% of Envista owned by Danaher has a market value of about $3.6 billion. If all of Danaher’s shares participate in the exchange offer, the proration ratio will be less than 4%. In reality, not all shareholders will participate, and the ratio will probably be somewhat higher, maybe 6-8% (just an educated guess on my part).


The exception is for holders of odd-lots, who own less than 100 shares. These shares get the odd-lot preference, and will not be prorated. So buy 99 shares of DHR and tender all the shares in the exchange offer. You will receive about 500-550 shares of NVST (depending on the prices of DHR and NVST near the end of the offer period). Immediately sell the NVST shares.


The offer expires on December 13. The number of shares you receive for each share of DHR will be determined based on the average VWAP of DHR and NVST on December 9, 10 and 11. There is an upper limit of 5.5784 shares of NVST for each share of DHR; there is no lower limit. If you participate, please read the exchange offer prospectus carefully.



(1)   Exchange offer is cancelled after we purchase DHR.

(2)   Odd-lot preference is cancelled after we purchase DHR.

(3)   Biggest risk: NVST price collapses between the time we purchase DHR and the time we receive NVST stock, a period of typically one to two weeks.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.


Completion of exchange offer.

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