21st Century Fox Warns Investors About Low-Ball Stock Offer

Rupert Murdoch CEO Summit 2011
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LONDON - JUNE 21:  Chairman of News Corporation Rupert Murdoch listens during The Times CEO summit at the Savoy Hotel on June 21, 2011 in London, England. The summit included News Corporation chairman Rupert Murdoch, chief executives of Goldman Sachs, Santander and Vodafone and Labour Leader Ed Miliband.

The Rupert Murdoch-led company recommends shareholders reject a so-called mini-tender offer from Canada's TRC Capital.

Rupert Murdoch's 21st Century Fox late on Thursday warned shareholders about an unsolicited so-called "mini-tender offer" by a company called TRC Capital that wants to purchase up to 3 million shares of the entertainment company for prices below the current stock market value. 

Fox said the Toronto firm, founded by a Canadian securities lawyer, has offered to buy Class A common stock for $30.25 per share in cash. Fox's stock on Thursday closed at $31.95.

"TRC Capital's offer price is approximately 4.6 percent below the closing share price of the Company’s Class A common stock on Sept, 3, the day before the offer commenced," Fox said. "The company is not associated with TRC Capital or this unsolicited offer and recommends that 21st Century Fox stockholders do not tender their shares in response to the offer."

Added the company: "21st Century Fox does not endorse TRC Capital's offer because it is at a price below the market price for the company’s Class A common stock and, as a mini-tender offer, it does not provide investors with the same level of protections as provided by larger tender offers under U.S. federal securities laws. The company urges shareholders to obtain current market quotations for their shares of Class A common stock, review the conditions to the offer, consult with their broker or financial adviser and exercise caution with respect to TRC Capital’s offer."

Mini-tender offers focus on acquiring less than five percent of a company’s outstanding stock, which allows the buyer to avoid disclosures.

The Securities and Exchange Commission has in the past also cautioned investors about mini-tenders. "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," it has said.

According to published reports, TRC has in the past also launched mini-tenders for shares of such companies as the maker of Blackberry devices, previously known as Research in Motion, Best Buy and chip maker Marvell Technology Group, chip supplier Qualcomm and Dutch consumer electronics giant Royal Philips Electronics.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai