TRC Capital Corporation has launched an unsolicited mini-tender offer to purchase up to 2 million shares, approximately 0.56%, of aerospace and defence company General Dynamics.
TRC is offering shareholders US$66.95 per share, a discount of 4.44% on the…
TRC Capital Corporation has launched an unsolicited mini-tender offer to purchase up to 2 million shares, approximately 0.56%, of aerospace and defence company General Dynamics.
TRC is offering shareholders US$66.95 per share, a discount of 4.44% on the closing price of General Dynamics’ common stock on 24 April 2012, the approximate date of commencement of the offer.
The General Dynamics board and management have rejected the offer arguing that not only is the price per share below the company’s current market price, but also that as a mini-tender offer it does not provide investors with the same level of protections as provided by larger tender offers under US securities laws.
Mini-tender offers, offers for less than 5% of a company’s stock, have grown increasingly prevalent and controversial over the past couple of years. The US Securities and Exchange Commission has frequently warned investors that mini-tender offer bidders often structure these offers to take advantage of security holders. Examples of this include inadequately disseminated offering documents to shareholders; extended below market value offers; or offers slightly above current market value but extended past the initial expiration date until the market price rises above the tender price.
Advocates argue that mini-tenders often provide a market for investors to sell illiquid securities
For its part, TRC Capital is widely seen as a frequent practitioner of mini-tender offers. Founded by Canadian securities lawyer Lorne Albaum, TRC has made a series of mini-tenders over the past couple of years targeting large companies such as Ford, Rio Tinto and Best Buy.
Meanwhile, General Dynamics has executed a definitive agreement to acquire IPW Holdings, the parent company of IPWireless, a provider of 3G and 4G LTE wireless broadband network equipment and solutions for first-responder and military customers. The value of the cash transaction has not been disclosed.
The acquisition has been approved by the boards of directors of both companies and is expected to be completed in the third quarter of 2012.
