Ann: Westpac announces $3.5 billion off-market share buy-back, page-86

Someone already said this at the beginning of this thread. The problem is that the part that is fully franked dividend is not big enough to justify the huge discount from the market price that Westpac is asking for! After getting that franking credit, you still would not be able to get back all the discount from the market price that Westpac asks for. And this makes Wespact's offer stupid. Someone who held WBC yesterday at 25.50, today lost 7.30% to 23.80 then Westpac wants to buy from this person at between 8% - 14% discount from this price 23.80 so it could be around 21.0. Who would want to sell at this price when the franking credit is not going to take the total back to 25.50! What a dumb ass proposition by Westpac.

The selling today is also funny! If it is in response to Westpac's 3.5 billion shares buy back offer then it's so dumb. No one will participate in this. I read on the SMH and analysts had concerns about Westpac's costs and lower margin going forward, and this was the reason for the big drop. I think this is overblown! The company has 3.5 billion to return to the shareholders. It came up with such a stupid idea on how to do the job. They probably thought that the announcement would lift the share price by 8% to allow them to ask for 8%-14% discount and still reward shareholders with a decent amount of franking credit ... Instead of getting an 8% pop, they get -7.30% instead! So, the buy back program is now in tatters.

But I don't care. It's a good entry price. The dividend is good. That 3.5 billion will stay with the company and they will have to return it by another way (more dividend next time). It creates a situation where put option premium is so good! Selling at the money I get nearly 4% premium for around 5 weeks of waiting. I could potentially buy WBC at another 3.9% discount in 5 weeks or just pocket the premium.