Friday, November 23, 2012

Banque Tarneaud - Special Situation

Crédit du Nord has has extended an irrevocable offer to buy the 21.5% of the shares in Banque Tarneaud that it does not already own, at a price of EUR140.  The tender window closes in just under 3 months. Stragglers representing less than 5% of equity will be squeezed out at 140. The shares in question are currently quoted at 81.

Je remercie  Actions Ordinaires Entreprises Extraordinares pour l’idée.

Update: It turns out that the shares were halted on the eve of the tender and haven't traded since. That explains the rather large gap between price and value.

Disclosure: No position


  1. Thanks, red, for another good idea (I'm still watching the debt on the replica gun company... somebody's putting bids out there in the low 60s. I'm on the sidelines there since I just can't get comfortable wading in at these prices yet w/o a better understanding of French. The bond prices could get a lot cheaper if they come out and default on the 8% notes. I'll respond to your comment when I've had more time to think on it.)

    Can you send me the press release for this minority stake tender? I did a Google search and couldn't find it.

    Also, my concern here is -- what am I missing re: why the price hasn't converged to a more "normal" annualized M&A arb spread of <15%? This is an unprecedented spread, even given the ongoing concerns around the French banking sector.


  2. The offer, in French, is here:

    Google Translate does a creditable job of making this doc comprehensible in English.

    I've honestly no clue as to why the gap hasn't narrowed over the ten days week, even though it is a somewhat illiquid stock.

  3. Thanks for the link -- Google Translate does an excellent job on this one, you're right.

    Couple other things I was thinking about:

    1. What is the equities trading transaction tax the French just implemented? Is it 1% of the $ volume traded? And would that apply to both entry and exit (i.e. tender)? Spread is so large here it doesn't really matter, but maybe this (in addition to the illiquidity) is preventing the statistical arbs from getting involved.

    2. What is the withholding tax the French apply to short-term gains? I.e. if you make a profit of EUR 100k, what % of the EUR 100k is withheld by the French tax authorities? In the U.S., for example, I believe the rate is 25%, and the only way you can get your $25k back is by filing your taxes with the IRS (the federal US tax authority). As a small investor, this may be more troublesome than it's worth to file French taxes.

    Thanks again

  4. Check this out, then drill down into the order book -- it looks like people have finally sniffed this one out. I can't get the time series data beyond Nov 9th, but looking at today's intraday trading stats, there are bids in the high 110s [some knucklehead is even bidding EUR 140].

  5. The new equity transaction tax amounts to 0.2% of the value of the transaction. But my understanding is that it applies only to the purchase of large cap (>1 billion) stocks. HFTs & stat arbs, of course, have already found a way around this levy: their brokers allows them to place directional bets without actually owning the underlying.

    For US persons, the French short term capital gains tax = 48.3%. You'd file with the (US) IRS for a foreign tax credit to recover some of that. Well worth a call to the broker on this -- at least to make sure that they are ("SARF") accredited to withhold the tax.

  6. Haha, I didn't know that on the transaction tax -- revenge of the good ole' total return swaps (TRS). And here I was sitting here thinking that TRS were still only being used for purposes of avoiding poison pills, illiquidity, the 5% ownership disclosure rules :).

    Jesus, 48.3%? That's unbelievable. Do HFs set-up Cayman / BVI blocker entities, etc. to avoid paying those rates in France? I don't know how anybody can generate alpha with that kind of return bleed.

  7. Took a quick look at this, would be amazing if true, but think trading simply has been suspended since the press release announcing the offer, see: and if you check transactions on you don't get any quotes after nov 09, and same story if you check Yahoo finance for example.