Viacom is recommending that its shareholders reject an offer from TRC Capital to buy Viacom stock for $38.88 a share, substantially less than the stock istrading for.
Unlike most tender offers for stock, which are priced at a premium, mini-tenders like TRC’s are used to catch investors off guard and allow the offerer to make a quick profit by selling any shares that are tendered, according to the Securities and Exchange Commssion.
“Viacom does not endorse TRC's unsolicited mini-tender offer and recommends that shareholders do not tender their shares. Viacom recommends that shareholders exercise caution with respect to TRC's unsolicited mini-tender offer, and notes that the offer price is below Viacom's current share price,” the company said.
Mini-tenders are not subject to many of the disclosure and procedural requirement as traditional tenders, and the SEC has cautioned investors about them, Viacom notes.
TRC is offering to buy up to 2.5 million Viacom shares. Viacom says TRC’s offering price is 5.6% below Wednesday’s closing quote of $41.18. .