Ionis urges investors to reject TRC Capital mini-tender

Ionis says TRC's offer is below market price and lacks protections.

Canadian investment group TRC Capital—well known for its mini-tender offer strategy—has now set its sights on Ionis, and the biotech group is not happy.

In a statement, Ionis has urged its shareholders to reject the offer for around 2% of its outstanding shares as it is below the current market price and comes with "numerous conditions," adding that this type of offer doesn't "provide investors with the same level of protections as provided by larger tender offers under U.S. securities laws."

TRC's offer price of $44.88 per share is about 4.47% lower than the $46.98 closing share price of Ionis' common stock on August 18, the business day prior to the date the offer was made. The group is trying to buy about 2% of Ionis' outstanding stock.


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Mini-tenders seek to buy a small proportion of shares in a company—anything under 5% bypasses U.S. financial regulations—at a discount to the market price. The Securities and Exchange Commission (SEC) takes a dim view of the practice, saying that bidders often use mini-tenders to catch shareholders off guard.

"They count on investors jumping to the conclusion that the price offered includes the premium usually present in larger, traditional tender offers. But with mini-tender offers, the price offered may actually be below the market price," it says in official guidance.

TRC Capital has previously employed this strategy to try to gain footholds in Pfizer, Baxalta, Alexion and Express Scripts, as well as in other companies including Yahoo and PayPal, all of which also recommended that shareholders turn the offers down.

"Investors who surrender their shares without fully investigating the offer may be shocked to learn that they cannot change their minds and withdraw," says the SEC. "In the meantime, they've lost control over their securities and may end up selling at below-market prices."

Ionis has urged investors to get up-to-date market quotes for their shares and take financial advice before taking action. It notes shareholders who have already tendered their shares "may withdraw them at any time prior to the expiration of the offer," in accordance with TRC's offer documents.

While there is no suggestion that TRC is doing anything illegal, there have been incidents in the past in which mini-tenders have gone horribly wrong.

In 2000, The New York Times covered a case in which Carnegie Investment Management acquired millions of shares in toymaker Mattel, without paying for them, and then borrowed $10 million against the stock. Using the funds to day-trade, they lost heavily and filed for bankruptcy, leaving those who tendered Mattel shares out of pocket.

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