MUMBAI: Canadian firm TRC Capital, which has been known for making “mini-tender” offers for stock in big companies at below-market prices, has now targeted Viacom Inc. 

TRC Capital has made an unsolicited “mini-tender” offer to purchase up to 2.5 million shares of Viacom Class B common stock at a price of $38.88 per share, which is approximately 4.7 per cent below the closing price on 22 December, 2015, the day before commencement of the offer, and approximately 5.6 per cent below Wednesday’s closing price of $41.18. The offer is for approximately 0.72 per cent of the outstanding Class B shares of Viacom common stock as of 4 November, 2015.

Viacom says that it does not endorse TRC’s unsolicited mini-tender offer and recommends that shareholders do not tender their shares.

The media behemoth has recommended that shareholders exercise caution with respect to TRC’s unsolicited mini-tender offer, and notes that the offer price is below Viacom’s current share price. The company also noted that the offer is subject to the satisfaction of a substantial number of conditions, including the absence of any decrease in the market price of the company’s shares from the price on the date of the offer and the ability of TRC to finance the offer. If the market price of Viacom shares falls or TRC cannot obtain financing, TRC is permitted to terminate the offer and not purchase any shares.

“Viacom strongly encourages shareholders to obtain current market quotations for their shares, and to consult with their broker or financial advisor. Shareholders who already have tendered their shares are advised that they may withdraw their shares by providing the written notice described in the TRC offering documents prior to the expiration of the offer, currently scheduled for 12:01 a.m. eastern time on Friday, 22 January, 2016,” the company said.

TRC Capital has made many similar mini-tender offers for the shares of other companies. Because TRC Capital’s mini-tender offer is for less than five per cent of Viacom’s outstanding shares, it is not subject to many of the disclosure and procedural requirements of the Securities and Exchange Commission (SEC) that are designed to protect investors. The SEC has cautioned investors about mini-tender offers, noting 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.”