In a June 26th notice, investment company Ponos Industries LLC extended an unsolicited “mini-tender” offer to Verizon Communications, Inc. (VZ) to purchase two million shares above current market value at $60 each of the company’s stock. Verizon responded to the offer by urging its existing investors to carefully consider the proposal and consult with financial advisors before acceptance.
While the Ponos offer exceeds current Verizon stock valuations, the offer is conditional on Verizon shares closing above $60 a share on the last full day in the NYSE. A stock sale of this nature could place shareholders in the position of receiving a below-market price for their stock. The Ponos mini-tender offer is written to expire on July 30th; however, Verizon informed parties that per the offer, the company could extend payment far beyond this date. The investment company’s offer also does yet to secure financing.
Mini-tender offers are discouraged by the United States Securities and Exchange Commission (SEC) because they have been shown to “catch investors off-guard” and often incite a situation where investors release their stocks for less than their market values. Verizon investors have the opportunity to withdraw any shares they have already tendered prior to the offer’s expiration by giving written notice.
At the close of the market on Friday, Verizon shares had risen by 1.02% to $54.49.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.