Lennar (LEN) split-off exchange offer

Investment Analysis Clubs Jim Royal
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https://www.envisionreports.com/lennarexchange/2025/lennarexchangenov03/index.html?voting=true

Ok, we got this year’s split-off exchange offer, courtesy of Lennar (LEN). It’s the usual setup: buy stock in the offeror (LEN) and then trade it for stock in its recent spinoff, Millrose Properties (MRP). This is subject to an odd-lot priority of 100 shares, so if you buy 99 shares of LEN, then they guarantee you get to exchange the full amount, if the deal goes through. Ultimately, you’re buying MRP at a 6% discount.

At current prices and exchange ratio, you’re set up for a profit of about $1,000. You can buy LEN and then short MRP, though I haven’t checked the cost of borrow on MRP. However, this offer has a wrinkle: It’s been postponed once because of the government shutdown (the SEC won’t review the registration statement) and may well be postponed again. They’ll notify investors on Nov 7, if it’s going to be postponed again. If the deal is going through, they’ll notify you of the exchange ratio the day before. That’s the day I’m waiting on…

Jim

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Thanks, Jim! Love me some spinoffs!

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Based on what I am seeing today - the profit is abou $755. 99 shares of LEN at 122.58 is 12, 135.42. This converts to about 404 shares of MRP, each worth 31.89 or 12,890.48

Not Bagger Dave like, but not bad. Can we do this in multiple accounts?

Vinnie G

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We’ll get the exact exchange ratio the day before the offer expires, so you’ll know that rate. It looks like there’s a good chance that the shutdown continues, so we may see further delays here. In any case, there’s no reason to rush in yet.

You can do this only once per SSN, or you’ll own more than the odd lot priority. So once for yourself, once for a spouse, once per child, etc.

Jim

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I always love these kind of ideas from this board!!! :rocket: :rocket: :rocket:

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Thanks, Kingran. These split-off exchange offers are interesting things. I post whichever ones I see, but I don’t see more than about one per year.

Jim

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Yesterday, the offer was extended to 11/21….