Wal-Mart Stores Inc. on Tuesday rejected an unsolicited mini-tender offer from TRC Capital Corp., dated Jan. 20. TRC has offered to purchase up to two million shares of Wal-Mart’s common stock at $59.88 a share. The offering price is about 4.3 percent below the closing price per share of Wal-Mart’s common stock on Jan. 19, the last day before the offer was made. Wal-Mart said it is not associated with TRC Capital and recommends that shareholders reject the unsolicited offer.
Mini-tender offers typically seek less than 5 percent of a company’s underlying shares, which allows the offering company to avoid many of the U.S. Securities and Exchange Commission disclosure and procedural requirements for tender offers. The SEC on its Web site says mini-tender offers “have been increasingly used to catch investors off guard. If the tender offer is for less than 5 percent of the company’s stock, exercise extreme caution. Unlike other tender offers, you generally cannot change your mind after you have tendered your shares in a mini-tender offer, even if the offer hasn’t yet closed. You may end up selling securities at below-market prices.”
Wal-Mart said TRC Capital, a private investment firm based in Toronto, has a history of making mini-tender offers. “Like its other offers, this one puts individual investors at risk because they may not realize that they’re selling their shares at a discount,” the retail giant said.
TRC Capital last week made a mini-tender offer to Dominion shareholders, TRC in 2015 set its sights on Viacom, and the company in 2010 made a mini-tender offer for HP shares. The respective managements of the three companies urged investors to reject the offers.
“Wal-Mart urges investors to get current stock quotes for their shares of Wal-Mart, consult their financial advisers and exercise caution with respect to TRC’s offer,” the retailer said. Wal-Mart advised shareholders who may have already tendered their shares that they may withdraw them by providing written notice to the address listed in the TRC offering documents, as long as the offer hasn’t expired. TRC has set the expiration at 12:01 a.m. EST on Feb. 18.
Wal-Mart shares were trading up 0.8 percent on Tuesday, at about $63.93. The retailer’s shares are up 10.2 percent for the past three months compared with a decline of 8.4 percent in the same period for the S&P 500.