26 Jan ALSTOM TENDER – BUYBACK
The standard tender mechanism employed by companies to complete an off-market buy-back produces material tracking risk for index funds. Going into the event the fund cannot know the level of acceptance that will be applied by the index provider as that outcome is only known after the event tender deadline. Our analysis of the Alstom tender buyback pro-rate mechanism illustrated a method for fund managers to exactly replicate the index outcome.
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