Social Icons

Thursday, September 12, 2013

A Pot of Gold: Loblaw acquisition of Shopper Drug Mart

If you are rich or even not, and have a few thousands at your disposal for investment activities, you might like to read the following because I have an easy trick to share on how to make easy money with no pain at all.

Here at, we really like when big fish eat small fish, meaning we like companies acquisition! My really first major one was TMX Group. As soon I read that the TSX was going to be acquire, back then it was supposed to be acquired by the London Exchange, well I jump on the occasion using my margin money of course. I got my hands on a few stocks at a great price. I hold, and when a deal was made, not with the London Exchange but with a corporation or banks and other gangster gangs, I hold and wait, and happily cash in the $$$.

Today, Loblaw announced that it will acquired Shoppers Drug Mart. Shareholders have vote in favor so its now just a matter of a few months before the deal come for real. According to this article, Loblaw will pay $61.54 per Shoppers Drug Mart shares. Shoppers Drug Mart closed today session at $58.88. Right now, if you invest let say in 100 shares of Shoppers at $58.88 (it could be possible to get shares at this price), well, you are GUARANTEE to make a quick and easy $266 very very easily.

Now, its better to do this with real cash because Loblaw takeover will only take in effect by the beginning of 2014. You can use margin cash, but you'll have to pay 4.25% interest. $6 000 at 4.25% make $21.25 per month in interest fees. Let say that the Loblaw takeover will happen in 5 months of now, this is how much you'll pay in interest: $21.25 X 5 = $106.25 and remember, you can declare this interest on you taxes because you are using debt to invest!

$266 made in the deal - $106.25 of interest fee - $9.99 in commission fee (for the purchase of the 100 stocks) = $149.76

You could make a clear $149.76 very, extremely easily.

Maybe you'll say that the profit made is too small, that it doesn't worth the trouble, etc. etc., but, no profit is never too small, especially in this rough economy. That $149.76 cover the cost of a ticket for Montreal-New Brunswick. MARVELOUS! Home sweet home, you are all mine.

Am I going to do this?

Well, it will all depend of the market opening.

Oh, and also, another great thing to consider is that Shoppers Drug Mart will pay dividend in the meantime, the next dividend date is September 26. Remember the 3 full business days BEFORE the 26 in order to be in for the dividend distribution.

To the profit of $149.76, you can easily add 2 dividend distribution of $28.50 each, for a total profit of $206.76.

That's interesting!

Another big+ is that I guess Shoppers have a nice margin value. So your margin value and money left will just go up for the period you hold in Shoppers...

Ok, so if this is not brilliant, I will tell you my real name.

LOL :)))))


Anonymous said...

Well you better get ready to reveal your real name because as always you have it all wrong. The purchase price for Shoppers is $33.18 cash and .5965 shares of loblaw for each share of Shoppers. As of today's loblaws price that would be a total of $60.00 which is lower than the 61.54 when announced because Loblaw was than trading at $47.55 compared to $44.99 today.

So if Loblaw shares goes down more in the meantime as it has since they announced the takeover, you will get even less than $60.00. If it goes higher, you will get more. As you see, the only part that's guaranteed is the $33.18 in cash.

Anonymous said...

Completion of the Arrangement remains conditional on approval by the Ontario Superior Court of Justice (Commercial List), compliance with the Competition Act (Canada) and certain other closing conditions.

Anonymous said...

When you play games, it really is more like gambling... Get back to investing... Just like the games you play with your credit cards, eventually time catches up with you and you are back near the bottom :(. You need a more solid plan, to get ahead. - Cheers.

Anonymous said...

Also your $266 is it not considered capital gains and thus you are effectively taxed on this. You didn't factor taxes into your calculations.

Anonymous said...

the stock already went up on the takeover news, the stock has not much room to go up anymore. if you bought shopper's when it was trading in the 40 range, in fact it was trading in the 40s for the past 5 years at least!!! ie before the big news, you made a good 25 pct. the question is why NOW vs back then? Plenty of opportunity to buy well below 50 dollars even!!! your research is based on HOT STOCK TIPS NEWS when the stock made 52-week high then the company is on your buying RADAR = VERY POOR STRATEGY = RECIPE for disaster.

Anonymous said...

basically buy on the 25th or before the stock to get the dividend. however, the stock will go down by the amount of the dividend on ex-dividend date so no free lunch here. you probably don't understand a concept that paying out a dividend comes out from the company's cash and therefore the price of the stock will go down due to that cash out means less asset means lower stock price. you always think the most positive way never factor the downside. if it this was truly free money so to speak, everyone will flock their life savings in this and make a killing. unfortunately this is not the case. the people who really made money are the ones who bought when the stock was trading anywhere in 40s range, some had to suck it up and stay the course as the stock did nothing for the past 5 years. the deal has to go through regulation and if the competition bureau judges too much advantage to loblaws, your 59 dollar investment will go down to 48 and lower dollars on the day of announcement and probably will stay there or even lower for a long time...

Anonymous said...

pot of gold really? I would think twice before getting into this. If this was GUARANTEED, everyone will put all their life savings into this. There's no such thing as GUARANTEED in life. If it sounds too easy, too good to be true, there must be a catch. Not saying that it won't succeed, but the downside risk is 25% and you just to make peanuts. The best time was to buy when it was 40 dollar range. Buy at 59 to make few dollars what's up with this?


Thank you

Thank you for visiting!
Blogger Templates