Out of curiosity: i'm short 1000 stock AAA. AAA announces a selftender in which it buys back, say, 5% of its outstanding stock. The stocks are tendered by the person I'm borrowing them from, and get pro-rated. After the tender ends I'm suddenly, say, 950 stocks short (as 50 were accepted by the company). What happened to the 50 stocks I had shorted, but I'm now not short anymore. What have I paid to decrease my short-position. I feel like this is all painfully obvious, yet can't quite get my head around it.
Assuming I understand your question, your broker will buy the assigned shares at the tendered price. You will pay what the company pays.
I thought he will be bought in in the open market. The tender proceeds go to the lender of the stock.
newwurldmn, I believe I'm correct and just confirmed with someone else at my firm. Simple example. XYZ has 100M shares outstanding and does a tender offer for 10M shares at $45. When they execute the transactions, if I'm short 10K shares on that date, my broker will enter a trade in my account that I bought 1000 shares at $45 from the tender. Reducing my short by 10% to 9K shares from the corporate action. That stock at that price will be used to provide a long account that tendered, the same price that every one else gets. Bob
In my broker statement the transaction resulted in a zero result. The way you put it (buy and sold at same price), this makes perfect sense.. thanks for the explanation!