Strange tender for General Electric stock


A Canadian investment fund, TRC Capital, has made a tender offer for General Electric’s stock. But the so-called “mini-tender” is only for a small number of shares. GE, currently the parent company of NBC Universal, is warning its shareholders to steer clear of the offer.

First off, the offer by TRC is to purchase up to five million shares of GE at $15.15 per share. That was less than the open market price for GE shares, which closed at $15.86 on the NYSE the day before the mini-tender was launched. Even though Tuesday (11/23) was a down day for stocks, including GE, the stock still closed at $15.76. So, shareholders can still sell GE on the open market for more than TRC is offering.

“GE does not endorse TRC’s offer and recommends that shareholders do not tender their shares in response to the offer because it is a mini-tender offer at a price below the current market price for GE shares and is subject to numerous conditions. GE urges shareholders considering TRC’s offer to obtain current market quotations for their shares, review the conditions to the offer, consult with their broker or financial adviser and exercise caution with respect to TRC’s offer. GE is not associated in any way with TRC, its mini-tender offer or the offer documentation,” GE said in a statement.

RBR-TVBR observation: “There’s a sucker born every minute,” said banker David Hannum, although his quote has long been misattributed to the man he sued for fraud, P.T. Barnum. These mini-tenders sometimes work because some investors aren’t paying attention and think they need to tender their shares. Yes, it is legal, although the SEC has warned shareholders to beware. TRC has made a business of doing these mini-tenders below market prices, so there must be plenty of suckers out there.