DOW - Dow Chemical Spin-off: Small Arbitrage Opportunity

[Ben_S]

For those interested in these types of situations, there is a small (~$400 upside) but very low risk potential arb opportunity in DOW's spin-off of OLN. DOW has started an exchange offer (set to expire October 1) through which DOW shareholders can exchange their shares for OLN shares at a 10% discount (though subject to a cap on the max ratio). There is an odd lot provision that gives holders of fewer than 100 shares priority treatment. So buying/tendering 99 DOW shares shortly before offer expiration and shorting a corresponding number of OLN shares could be interesting.

 

 

[NBL0303]

Great first post.  Cool little opportunity.

[fa21212]

Thanks for posting. What's the risk? Do you mind posting a link to the SEC filing that describes the opportunity?

[Ben_S]

No problem. I believe the only material risk would be if the offer were canceled, but in my opinion this is highly unlikely (especially if you wait until close to offer expiration to put the trade on).

 

Here is the SEC filing: https://www.sec.gov/Archives/edgar/data/29915/000094787115000617/ss449561_ex9901.htm