Oil industry services specialist Baker Hughes (NYSE: BHI ) is recommending shareholders reject an unsolicited "mini-tender" offer to purchase up to 2.5 million shares, about 0.56% of its common stock.
The company said yesterday that it had received notification of an offer by TRC Capital to purchase up to 2.5 million shares for $42 per share, about 4.6% below shares' $44.03 closing price last Wednesday, the day before the offer. Shares are trading at $44.63 as of this writing.
Baker Hughes recommended that stockholders who have not responded to the offer reject it as being too low of a price for their shares. The company suggested stockholders who already tendered shares in response to TRC Capital's offer withdraw their shares in writing.
As Baker Hughes explains, mini-tender offers seek to acquire less than 5% of a company's stock. Because they are for less than 5% of the company's securities, they only have to comply with antifraud regulations and not other sections of securities law that provide protections for investors.
The SEC has issued a warning about mini-tender offers, saying they have been increasingly used to catch investors off guard. Says the SEC: "Many investors who hear about mini-tender offers surrender their securities without investigating the offer, assuming that the price offered includes the premium usually present in larger, traditional tender offers."
TRC Capital has made mini-tender offers its forte and in recent weeks has made similar offers for Express Scripts, Apache, and First Solar.
Baker Hughes is a leading supplier of oilfield services, employing more than 58,000 people in more than 80 countries.