Because the exchange offer was oversubscribed, GE is accepting only a portion of the shares of its common stock that were validly tendered and not validly withdrawn, on a pro rata basis in proportion to the number of shares tendered. Shareholders who owned fewer than 100 shares of GE common stock, or an “odd-lot”, who have validly tendered all of their shares and made the appropriate election, will not be subject to proration, in accordance with the terms of the exchange offer.
Shares of GE common stock tendered but not accepted for exchange will be returned to the tendering shareholders in book-entry form promptly after the final proration factor is announced. Promptly after the final proration factor is announced, the exchange agent will credit shares of Synchrony Financial common stock for distribution in the exchange offer in book-entry form to accounts maintained by the Synchrony Financial transfer agent for tendering shareholders who have validly tendered and not validly withdrawn their shares of GE common stock. Checks in lieu of fractional shares of Synchrony Financial common stock will be delivered after the exchange agent has aggregated all fractional shares and sold them in the open market.
The transaction reduces GE’s float by 6.6%, and is the equivalent of a $20.4 billion buyback. More importantly for GE, it ends the company’s ownership of the credit card issuer, and will, soon, remove it from oversight by the Fed.
GE has pending with the Federal Reserve Board an application for termination of its status as a savings and loan holding company.
The large transaction also drove massive options volume, with GE accounting for nearly one-sixth of November options volume, as investors hedged GE shares that they tendered.
Disclosure: The author owns shares of GE, which were not tendered.