Today SXC Health Solutions (SXCI) announced a merger with Catalyst Health Solutions (CHSI) which sent shares of CHSI soaring.
CHSI stock closed at $64 yesterday and is trading at $83 today, 29% higher. I originally bought CHSI on 5/4/04 at $14.
Terms of the Deal
The terms of the deal are CHSI shareholders get 0.6606 shares of SXCI for each CHSI share. Or 100 shares of CHSI will be 66 shares of SXCI, plus cash of $28 a share. Shareholders might also get a little cash for fractional shares. If you own 100 CHSI you’ll get 66 SXCI and then probably cash for the 0.06 shares.
I Like SXCI
I’ve looked at SXCI before, and wish I had it earlier. I didn’t because I’ve had multiple PBM’s in my Growth Portfolio and didn’t want to overload in one sector. Still, SXCI was $20 in August 2009 when it broke out on high volume. I shoulda got in then. Now the stock is $86. I’ll continue to hold SXCI for my clients. This deal is expected to be “highly accretive” to SXCI’s 2013 profits.
Cost Basis
For those clients who were invested in the Growth Portfolio back on 5/4/04, I bought you CHSI at $14. My guess is the cost basis on the new SXCI stock will be $21.20 and the stock is selling for $86 now.
Holing SXCI will make it so clients don’t have to pay capital gains on a complete sale of CHSI stock, they will probably just pay taxes on the $28 plus-fractional-shares cash payment. Check with your CPA to be sure.
Sharek’s Take
This is a great deal because CHSI is up almost 30% today, our clients get $28 plus in cash, and SXC Health Solutions is a solid company that fits the mold of a stock I would own, should own, and will own.
