Demerger

Through a demerger operation, a company transfers a part of its corporate structure to a beneficiary company, either an existing or newly-established one. The shareholders of the demerged company hand in the shares held and receive new shares of the demerged company as well as shares of the beneficiary company.

Let us assume, for example, that the company "A" has demerged in favour of the beneficiary "B" with an allocation ratio of 3 shares of the company "A" and shares of "B" every 5 shares of "A" held. Therefore, the shareholder of company "A", for every 5 shares handed in will receive 3 new shares of "A" and 2 shares of "B", the beneficiary.

Stock option (futures) contracts subject to demergers will only change the deliverable (lot), while the strike price (daily closing price) remains unchanged. In other words, what will be delivered (or collected) upon expiry will be a basket of securities, whose valuation is made considering the value of the entire basket.

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Example

Demerger of Seat Pagine Gialle in Seat Pagine Gialle and Telecom Italia Media, official notice n. 7968 of 1/08/2003

• Name change of Seat Pagine Gialle S.p.A. into Telecom Italia Media S.p.A.;
• Partial spin-off of Telecom Italia Media S.p.A. (formerly Seat Pagine Gialle) in favour of the new company Seat Pagine Gialle S.p.A.;
• Assignment ratio: for every 40 ordinary shares of the company effecting the spin-off that will be withdrawn and cancelled, 11 ordinary shares of the company effecting the spin-off Telecom Italia Media (formerly Seat Pagine Gialle) and 29 new ordinary shares of the spin-off company will be attributed.

Adjustment on stock options

Stock options on Seat Pagine Gialle ordinary shares with lot equal to 2,500 stocks will be adjusted in the following manner:

• Strike prices: no adjustments;
• Underlying of adjusted stock option series: creation of a basket consisting of 1,812 new Seat Pagine Gialle ordinary shares + 688 Telecom Italia Media ordinary shares (formerly Seat pagine Gialle).

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