Medtronic is recommending its shareholders reject an unsolicited mini-tender offer from a Canadian investment firm looking to acquire up to 1.5 million of its shares.
Toronto-based TRC Capital Investment Corp. recently floated an offer to buy the Medtronic shares for $77.25 per share — a discount from what the medtech giant's shares have been trading for in recent weeks.
On Friday, Medtronic's stock closed at $82.58, 6.9% higher than TRC's offer price.
The company this week issued a cautionary statement for stockholders: "Medtronic does not recommend or endorse TRC's unsolicited below-market mini-tender offer. Further, because the offer is at a price significantly below the current market price of Medtronic ordinary shares, Medtronic recommends that shareholders not tender their shares."
Tender offers typically provide a premium price to shareholders as an incentive to sell shares. Sometimes tender offers are a tool used by investors who are looking to acquire a significant chunk of a company's stock to mount a takeover bid.
Mini-tender offers, however, seek less than 5% of a company's stock, a level of ownership that avoids regulatory scrutiny. TRC's offer for 1.5 million shares represents just 0.1% of Medtronic's outstanding stock. The offer runs through Feb. 22, but it could also be extended or terminated.
Erika Winkels, a spokeswoman for Medtronic, said the company has not seen other recent mini-tender offers for its stock.
TRC, which has a track record of making similar offers for a wide range of companies across numerous different industries, made one to Medtronic shareholders in 2006, Winkels said.
At the end of December, the Walt Disney Co. advised its shareholders to reject a mini-tender offer from TRC for up to 1.5 million shares. Last April, medical products company Abbott, a Medtronic competitor, recommended that its shareholders reject a mini-tender offer from TRC.
The firm describes itself as a "private investment corporation that manages a diverse investment portfolio," though TRC's exact holdings are unclear.
"We are also not aware of any disclosures that TRC Capital has made regarding their investment in any public equities, including Medtronic," said Winkels.
A representative of TRC could not be reached for comment.
The U.S. Securities and Exchange Commission has recommended that investors should approach mini-tender offers with caution: "Investors need to scrutinize mini-tender offers carefully. Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard."
Some shareholders, the SEC warns, might erroneously assume the mini-tender offer brings a premium price without investigating the details.
For the first six months of its 2023 fiscal year, Medtronic spent $324 million on net share repurchases.