One day after McCormick & Company acquired Cholula hot sauce for $800m in a deal that will accelerate the spice company’s growth opportunities and expand its portfolio, the CPG giant is warning investors to reject an unrelated, unsolicited and undervalued mini-tender.
McCormick recommended Nov. 25 that stockholders reject an offer from TRC Capital Investment Corp. to purchase up to 750,000 shares of the company’s common stock for $176.38 per share, noting the offer prices was 4.46 percent below the closing price of the company’s common non-voting stock Nov. 13 when the offer commenced.
McCormick also warned stakeholders that mini-tender offers, like the one by TRC Capital, do not offer the same protections of larger tender offers under the US federal security laws because they are for less than 5% of a company’s shares, and therefore do not trigger SEC tender offer rules.
While legal, mini-tender offers “have been increasingly used to catch investors off guard” and often target less sophisticated investors who assume that the price offered includes the premium typical of larger, traditional tender offers, warns the Security and Exchange Commission. It adds that mini-tender offers do not give investors an opportunity to back out of a sale once they agree to it, causing the sale of securities often below market prices, SEC adds in a tip sheet for investors.
Given these risks and that the offer is under-valued, McCormick “urges stockholders to obtain current market quotations for their shares, review the conditions to the offer, consult with their broker or financial advisor and exercise caution with respect to TRC Capital’s offer.”
