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Baker Hughes Urges Shareholders to Reject "Mini-Tender" Offer

By Rich Duprey - Apr 24, 2013 at 1:50PM

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Company says price is too low.

Oil industry services specialist Baker Hughes (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.

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