Molson Coors Beverage Companyreported today that TRC Capital Investment Corporation has made an unsolicited “mini-tender” offer to purchase up to 2,000,000 shares of the Company’s Class B common stock at an offer price of USD 52.95 per share in cash. The company said that it does not endorse the unsolicited mini-tender offer and is not associated in any way with TRC Capital and that it recommends that stockholders not tender their shares in response to TRC’s offer.
Molson Coors argues that the offer price of USD 52.95 per share in cash is approximately 4.23% lower than the USD 55.29 per share closing price for the Class B common stock on the New York Stock Exchange on February 21, 2020, the last trading day before the commencement of TRC Capital’s mini-tender offer. In addition, the mini-tender offer is subject to numerous conditions, including, among others, that there has not been any decrease in the market price of the Class B common stock and that TRC Capital has received proceeds of debt financing sufficient, together with cash on hand, to consummate the offer.
The company concludes that mini-tender offers, such as this one by TRC Capital, do not provide investors with the same level of protection as provided by larger tender offers under U.S. federal securities laws. The Securities and Exchange Commission (SEC) has cautioned investors that some bidders make mini-tender offers at below-market prices “hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price.”
2 million shares represent only 0.4 % of the 500 million Class B common stock of Molson Coors and less than 0.2% of the company’s overall stock.
TRC Capital is a private firm founded by a Canadian securities lawyer which is frequently associated with mini-tender offers. Mini-tenders are offers to purchase less than 5% of the company's securities and therefore bypass SEC regulations that regular tender offers need to meet.
Most mini-tenders are made below the value of the security. In some cases, the bidder may be able to turn around and sell the acquired shares at market for a profit. In other cases, the mini-tenders may be for securities that do not have an established market, in which case the purchaser may profit sometime in the future if distributions from such securities exceed the purchase price.