Dollar Tree Inc. is urging its investors to carefully review a “mini-tender” offer from the investment firm TRC Capital Investment Corp.
The Chesapeake, Va.-based discounter said it was informed that TRC was offering to buy 1.5 million shares at $89.88 per share from existing holders—a price that was 4.44% below the closing share price of Dollar Tree stock on the day the offer was made.
Mini-tender offers seek to acquire less than 5% of a company’s outstanding shares, thereby avoiding disclosure and procedural requirements under U.S. federal securities laws. As a result, mini-tender offers often do not provide investors with the same level of protections as provided by larger tender offers under the U.S. federal securities laws.
TRC has a history of making similar offers to shareholders of other companies. If successful, the strategy can fuel fast and lucrative trades.
On its website, the U.S. Securities and Exchange Commission advises that the people behind these offers “frequently use mini-tender offers to catch shareholders off guard,” and that investors “may end up selling at below-market prices.”
Dollar Tree said it “expresses no opinion and is remaining neutral toward TRC’s offer.” But it emphasized that shareholders are not required to respond to TRC’s offer. The offer is set to expire Jan. 24, but TRC may extend the offer or terminate it before the expiration date.