Disney Doesn't Like Lowball Stock Offer

Getty Images
Disney CEO Bob Iger

The entertainment conglomerate recommends shareholders reject a mini-tender offer from TRC Capital.

The Walt Disney Company is the latest to be targeted by TRC Capital Corporation, an investment group that has made a habit out of what's known as a "mini-tender offer."

TRC is offering Disney shareholders $61 a share, which is $5 below its current market value. The investment group says it would purchase up to 2 million Disney shares.

The Mouse House doesn't like this.

STORY: Bob Iger Says Disney Might Create Content for Netflix, Amazon

"Disney recommends that shareowners not tender their shares because the offer price is below Disney’s current share price, and urges them to consult with their financial advisor and exercise caution with respect to TRC's offer," says a company press release.

Disney also points to an SEC investor alert about mini-tender offers, which says "bidders are hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price."

A mini-tender offer is one for less than 5 percent of outstanding shares. Any offer that exceeds 5 percent must be registered with the SEC, is subject to oversight and would undoubtedly attract too much scrutiny to make a lowball offer pay off.

STORY: Bob Iger Extends Disney Contract After Rejecting Gubernatorial Bid

But companies have gotten wise to the gambit.

Intel, Kraft, PG&E, Brookfield and Apache are just some of the companies that have responded to past mini-tender offers by TRC with investment advisories. And Disney isn't the only entertainment company not taking a chance that its investors would agree to a discount. Last month, 21st Century Fox also gave TRC's gambit a thumbs-down.