Mini-tender Offer

Categories: Mergers and Acquisitions,

Direct solicitation to the current stockholders for less than five percent of a firm's stock. The bidder's objective is to escape the provisions of SEC Regulation 14(e) which is triggered when an offer to purchase five percent or more of a firm's outstanding stock is made. Under this Regulation, all the SEC's tender offer rules aimed at preventing deceptive, fraudulent, and manipulative practices become applicable. These rules require the bidders to (1) disclose important information about themselves, (2) disclose the terms of the offer, (3) file the tender offer with SEC, and (4) provide the target firm's management, as well as other competing bidders (if any), with full details of the offer. By bidding on less than five percent, none of these rules apply.