Disney Asks Shareholders To Reject 'Mini-Tender'

TRC Capital Offers To Buy Stock at $3 Below Trading Price

The Walt Disney Co. has urged shareholder to reject a “mini-tender” offer from TRC Capital, claiming the deal is an attempt to snap up shares at a discount price.

TRC Capital launched an offer for 2 million Disney shares on Oct. 9 at a price of $61 each, $3 per share below the $64 per share trading price of the stock on Oct. 8. Disney shares were trading at $66.56 on Oct. 15.

In a statement Oct. 15, Disney urged shareholders to reject the tender offer, adding that such mini-tenders are often an attempt by companies to acquire shares at a bargain basement price from unsuspecting shareholders.

In a statement Disney urged investors not to tender their shares and to consult with their financial adviser.

According to a Securities and Exchange Commission investor alert, mini-tenders are purposefully made at below 5% of a company’s outstanding stock to skirt an SEC filing requirement, and are being used increasingly to catch investors “off guard.”

“Many investors who hear about mini-tender offers surrender their securities without investigating the offer, assuming that the price offered includes the premium usually present in larger, traditional tender offers,” the SEC stated in its investor alert. “But they later learn that they cannot withdraw from the offer and may end up selling their securities at below-market prices.”

According to Disney, the TRC offer is subject to a number of conditions, including that the market price of the stock does not fall below the price at the day of the offer, and the ability of TRC to finance the tender.

This isn’t the first time TRC has launched a mini-tender for a large media company. In September, TRC launched a mini-tender for 3 million shares of Twenty-First Century Fox for about 5% below its trading price at the time. In June TRC launched a mini-tender for 4 million shares of Intel for about 5%  below the chip-giant’s trading price.

Toronto-based TRC is a privately held firm founded by a Canadian securities lawyer and is frequently associated with mini-tenders. The company did not immediately return a call seeking comment.