AMD urges investors to reject mini-tender offer
TRC Capital looks to buy less than 1 percent of the chipmaker's outstanding shares at below its current market value.
TRC Capital, which has a reputation for launching mini-tender offers for a number of corporations, from Sun Microsystems in 2004 to Halliburton in 2004 to Abbott in 2006, is offering to buy up to 5 million shares of AMD at $13.25 per share. The offer represents 0.9 percent of outstanding AMD shares.
AMD shares closed at $14.55 on Thursday, prior to the announcement of its third-quarter results. But despite beating analysts' estimates on revenue growth and posting a narrower-than-expected loss, AMD shares were down Friday morning to about $13.82 a share.
The chipmaker reported revenue of $1.63 billion, up 23 percent from a year ago, while its net loss reached $396 million, versus a net profit of $136 million the previous year.
As with its other mini-tender offers, which involve less than a 5 percent stake in a company, TRC Capital is offering AMD shareholders less money to trade in their stock than they could currently get on the open market. The Securities and Exchange Commission cautions investors to be wary of such offers.
"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," according to an SEC advisory. "With most mini-tender offers, investors typically feel pressured to tender their shares quickly without having solid information about the offer or the people behind it. And they've been shocked to learn that they generally cannot withdraw from mini-tender offers."
But in the case of AMD shareholders who have already tendered their shares to TRC Capital, they may withdraw those shares with a written notice to TRC, providing it's done before 9:01 p.m. PDT on November 9, according to AMD.
The SEC also notes mini-tender offers usually do not provide the same level of disclosures, or protections, that traditional tender offers contain. Entities that are launching a tender offer for more than 5 percent of a company are required to disclose critical information about themselves and terms of the offer, according to the SEC.
Phone calls to Lorne Albaum, chief executive of TRC, were not returned.