Monster Beverage (MNST) odd lot tender offer (Time Sensitive Quick Read!)
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Disclaimer: I am long shares of Monster Beverage Corp (MNST) at the time of publishing this post. I plan to tender all my shares.
Press release here: https://www.bamsec.com/filing/110465924058430/1?cik=865752
MNST odd lot tender offer looks like free money.
Currently trading at around $52 per share.
Purchase price at $53-$60.
99 shares odd lot.
Conditional on MNST getting financing.
Expiry date: The Offer will expire at 11:59 p.m., New York City time, on June 5, 2024
Napkin math: $1 per share profit on 99 shares is around $99 of profit before trading fees on 99 share*$52 per share = $5148 USD. Roughly 1.9% return for 1-2 week holding period.
Before we get to Tax Implications (below this section), my sponsor, which is myself, would like to show you this terrific offer:
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Tax implications:
This is not tax advice. I'm not a tax professional. Consult with a tax professional.
See page 48 of the PR for where the company discusses tax implications:
https://www.bamsec.com/filing/110465924058430/2?cik=865752
If you didn’t have a position in MNST before this trade, you should be fine.
If you buy 99 shares with the intention of tendering all 99 shares, then you should meet conditions 1, 2, and 3. This way, you will be taxed as a capital gain.
Now I have no knowledge of US tax-free accounts, so I will just provide commentary to my Canadian folks below (if you are a US citizen, please comment below with your findings):
For Canadians:
This is not tax advice. I'm not a tax professional. Consult with a tax professional.
As far as I read, if you buy 99 shares and tender all shares, it will mean you have a "complete termination of interest," which means its a capital gain under Section 302 of the Internal Revenue Code of the US.
Dividends get taxed in TFSA. Capital gains do not get taxes in TFSA.
Dividends and capital gains do not get taxed in the RRSP.
Given that this should qualify as a capital gain if you simply purchase 99 shares and tender them with no prior position in MNST, that means you can hold this in TFSA or RRSP.
BUT, if you hold in TFSA, your broker may think its a dividend and take 15% withholding tax based on the US-Canada Tax Treaty, so when you do taxes, you'll have to ask the US government for the money back. This would be a real hassle for $15 bucks.
So the hassel-less way is to invest in this in your RRSP is my guess, given that dividends aren't taxed in the treaty for the RRSP.
This is not tax advice; I'm not a tax professional. Consult with a tax professional.
Not investment advice, DYODD. Could be unique tax implications that apply to you.
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