Shares of The Procter & Gamble Company (NYSE: PG) are barely break-even for the year, but that's no reason investors should accept a lower price for them. That's why the consumer products giant is urging shareholders to reject an unsolicited mini-tender offer by Mason Bell, which is looking to acquire 10,000 shares of the stock at a discount.
Procter & Gamble says the investor is offering to buy its stock for $106 per share, more than 12% below the $120 per share its stock was selling at on July 2, the last trading day prior to when the offer was made. Shares closed out last week at over $125 a share, 18% above the buyer's offer.
Why would someone sell at a lower price? Mini-tender offers try to catch novice investors off guard. Many have likely heard of tender offers, such as when one company wants to acquire the other and tenders an offer to buy the stock, though it's usually at a premium. Mini-tender offers are different, and while they're not illegal, even the SEC says to be wary of them.
In a mini-tender offer, the buyer is looking looking to acquire less than 5% of a company, which means the offers are largely unregulated. So long as Mason Bell doesn't lie, protections investors have with regular tender offers do not exist with mini-tenders. For example, investors with traditional tender offers can change their mind about selling, but with a mini-tender there is no do-over.
Mason Bell's goal of 10,000 shares is significantly short of that 5% mark; P&G has 2.5 billion shares outstanding.
Mason Bell is likely just trying to make a quick buck, and both new and seasoned investors would do well to follow Procter & Gamble's suggestion and ignore the offer.
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