The Travelers Companies reported on Tuesday it has been notified that TRC Capital Investment Corp. has made an unsolicited “mini-tender” offer to purchase up to 1,000,000 shares of Travelers’ common stock at $106.75 per share.
Travelers said it “does not endorse TRC Capital’s offer and recommends that Travelers shareholders not tender their shares in response to the offer.”
The offer price is approximately 4.5% below the closing share price of Travelers’ common stock on Aug. 21, 2020 ($111.83), the last trading day prior to the date of the offer, and approximately 6.9% below the closing price of Travelers’ common stock on Sept. 1, 2020 ($114.69).
In addition to having an offer price that is below the current market price for Travelers’ shares, the insurer said that TRC Capital’s mini-tender offer is subject to numerous conditions, including TRC Capital’s ability to obtain financing and there being no decrease in the market price of Travelers’ shares.
TRC Capital Investment Corp., a Canadian investment firm, is known for its mini-tender offers, which are offers to acquire shares directly from current investors in an amount less than 5% of issued stock offers. TRC has made similar offers this year alone to shareholders of Intel, Merck, Broadcom, CarMax, Molson Coors, Intuit, Phillips 66 and Diamondback Energy.
Because TRC Capital’s offer is for approximately 0.39% of the outstanding shares of Travelers’ common stock, the offer is not subject to many of the disclosure and procedural requirements of the Securities and Exchange Commission (SEC), which are designed to protect investors.
The SEC discusses mini-tender offers on its website and warns investors who may inadvertently sell their shares below market value.
Travelers said it encourages brokers and dealers to review the SEC’s letter regarding broker-dealer mini-tender offer dissemination and disclosures and recommends that shareholders consult with their financial advisors and use caution when evaluating TRC Capital’s mini-tender offer.
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