27 Aug HUDSON CITY BANCORP INC / M&T BANK
In this takeover, HCBK shareholders were given the option to receive either cash or MTB shares, with the total consideration being fixed at 40% cash and 60% stock. There was no ‘default option’ offering shareholders a guarantee of 40% cash : 60% stock as per the index rebalance treatment. Any fund trying to mirror the index therefore had unavoidable tracking risk. SCORPEO Analytics™ were engaged by an index tracking firm to analyse and predict the best methodology to minimize this tracking error. Our analysis showed a 60% reduction in tracking error.
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