To: All Haven Wealth Group Clients
RE: Conversion explanation to previous holders of PCYC stock
As most of you know, Pharmacyclics (PCYC) was one of our biggest winners this year (as well as last year) as it was bought by AbbVie (ABBV) for $261.25 per share. In order to complete the transaction, Haven Wealth Group (Haven) voted the proxies for all clients, choosing a 100% cash exchange for all non-taxable accounts (IRA’s & Pensions) and 100% ABBV stock exchange for all taxable (IMA) accounts. Our reasoning was to book the substantial profits in the non-taxable accounts where there was no tax burden, and to exchange the PCYC stock for ABBV stock, enabling holders to potentially recognize a long-term gain. While the merger allowed us to vote on an exchange option for our clients, what we actually received was subject to the breakdown between cash and stock that the shareholders of ABBV voted and agreed upon to complete the transaction.
As a result, we received 100% cash in exchange for the PCYC shares in all non-taxable accounts, as we requested. However, we received an exchange of 60% ABBV stock and 40% cash in all taxable accounts holding PCYC. All IMA accounts will show 60% of PCYC stock was exchanged for ABBV stock. Also, 60 % of the unrealized gain on the PCYC shares was transferred to the ABBV stock basis. The remaining 40% of PCYC stock in the IMA accounts was exchanged for cash, generating a short term gain.
We thought it was prudent to explain this exchange so everyone will know how the transactions were booked. In any case, PCYC was a great investment.
If any of you have any questions about these transactions, feel free to give us a call.
Richea and Charlie