Constellation advises shareholders to reject mini-tender offer

Corona beer owner Constellation Brands has warned investors not to fall for an attempt by TRC Capital Investment Corporation to buy its shares on the cheap.

Last week it told shareholders to ignore an unsolicited “mini-tender” offer by TRC Capital Investment Corporation, which offered to buy up to 500,000 (about 0.29%) shares of Constellation’s stock for $210.00 per share.

The price was about 5% lower than the prevailing level of Constellation’s stock on Wall Street.

Mini-tenders are a tactic for buying a stake of less than 5% in a company to obtain future leverage. They allow the suitor to bypass many filing, disclosure and procedural requirements imposed by the US Securities and Exchange Commission.

Constellation told shareholders that it “is not associated in any way with TRC, TRC’s mini-tender offer or TRC’s mini-tender offer documents.” The company said it “does not endorse TRC’s mini-tender offer and recommends that Constellation stockholders do not tender their shares in response to the offer. Constellation cautions stockholders that the mini-tender offer has been made at a price below the market price.”

The SEC has previously warned investors about mini tenders, noting that “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.”