Canada's Magna International said it had received notice of an unsolicited 'mini-tender' by TRC Capital Corporation to purchase up to 2,500,000 shares (0.63%) at CDN$41.85 (US$32.33) per share, a discount of 13.9% on the 14 July closing price on the Toronto exchange of CDN$48.63.
"In addition, the offer is highly conditional," the supplier said in a statement. "TRC Capital's offer states that it may withdraw its offer if, among other things, the market price of Magna common shares falls below $43.82, the closing price on the TSX on 6 July 2016.
"Magna does not endorse this unsolicited mini-tender offer and recommends that shareholders do not tender their shares. Magna is not associated with TRC Capital, its mini-tender offer or the mini-tender offer documentation."
The statement noted TRC Capital had made similar unsolicited mini-tender offers for shares of other public companies.
Mini-tender offers typically seek to acquire less than 5% of a company's outstanding shares, thereby avoiding many disclosure and procedural requirements applicable to formal take-over bids and tender offers under Canadian and US securities legislation, Magna said, adding the Canadian securities administrators (CSA) had expressed "serious concerns" about mini tender offers, such as the possibility that investors might tender to a mini-tender offer based on a misunderstanding of the terms of the offer, including the per securities price available under the offer relative to the market price of such securities.
"The US securities and exchange commission (SEC) has also published an investor advisory regarding mini-tender offers. In the advisory, the SEC cautions 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," Magna's statement continued.
The supplier urged shareholders "to obtain current market quotations for their shares, consult with their broker or financial adviser and exercise caution with respect to TRC Capital's offer.
"Magna recommends that shareholders who have not responded to TRC Capital's mini-tender offer take no action. Shareholders who have already tendered their shares should seek to withdraw them, including reviewing and strictly following the withdrawal procedures in TRC Capital's offering documents."