http://biz.yahoo.com/prnews/050418/dam0 ... =1OKLAHOMA CITY, April 18 /PRNewswire-FirstCall/ -- Kerr-McGee Corp. (NYSE: KMG - News) today announced that it is commencing the modified "Dutch Auction" tender offer for up to $4 billion of its common stock. The offer to purchase shares will expire on Wednesday, May 18, 2005, at midnight EDT, unless extended.In the tender offer, stockholders will have the opportunity to tender some or all of their shares at a price not less than $85 per share or more than $92 per share. Based on the number of shares tendered and the prices specified by the tendering stockholders, Kerr-McGee will determine the lowest per share price within the range that will enable the company to buy up to $4 billion of its common stock. If the number of shares tendered at or below the determined per share price totals more than $4 billion, Kerr-McGee will purchase shares tendered at or below the determined price on a pro rata basis, as will be specified in the offer to purchase that will be distributed to stockholders.All shares purchased by the company will be purchased at the same price, even if stockholders selected a lower price; however, the company will not purchase any shares tendered above the determined purchase price. If the tender is fully subscribed, $4 billion of common stock will be repurchased, representing 27.0% to 29.0% of the approximately 161.4 million shares outstanding as of March 31, 2005._____________________I'm a novice here...but what is the catch? And why not buy the May 75 put for 1.15 to hedge out the exposure even they they have already reported.Comments? Am I missing something. Thanks.

QuoteOriginally posted by: Proptraderhttp://biz.yahoo.com/prnews/050418/dam087.html?.v=1Comments? Am I missing something. Thanks.Well, I am not an 'arb', but your post made me read some of the news announcements on this one.Based solely on those, my prediction is: the stock will open, post-tender, down $1.60 from the previous close. Why? Two reasons. First, your quoted story omits the part about the $1.60 of 'foregone' dividends.So, my first reaction was that the market will treat this like a $1.60 ex-dividend event. Second, accepting this scenario then puts my expected profit (unleveraged) at about $0.60 per share or 0.75% based on today's close, which seems plausible for a 3-4 week hold. Of course, losses are quite possible under a lower open, andthey can't be removed with puts (although some extreme losses could be made less extreme). So it's certainly not a free lunch. Is it 'easy money'? - well, annualized, it seems in the range of an 'ordinary' equity-type risk to me. What's your arithmetic? regards,

Yes. It WAS "easy money." Hence, they have cancelled the offer.

What do mean they cancelled it? you mean the odd lot thing or the whole deal.

The tender was amended to remove the odd lot priority. I guess everyone and their brother was shooting at this one...I would have been.