Topic: How To Invest

Q: I have just received an announcement of a mini-tender for Loblaw stock by TRC Capital. It gives Loblaw shareholders the following options: Option 1: To receive $111.11 for each share of Loblaw; and Option 2: Not Participate (Default Option). I have 2,100 shares of Loblaw at the present time. Please advise which option I should take. Thank you for your kind attention.

Article Excerpt

A: Loblaw Companies Ltd., $119.50, symbol L on Toronto (Shares outstanding: 316.9 million; Market cap: $37.6 billion; a recommendation of our flagship publication, The Successful Investor. It is now the subject of a “mini-tender” offer from TRC Capital Investment Corporation. Mini-tenders typically bid for shares at prices below the market price, and the offers are highly conditional. Generally, these proposals aim to buy less than 5% of a company’s outstanding shares. That way, they avoid certain regulatory requirements. The U.S. Securities and Exchange Commission (SEC) has issued comments about mini-tender offers. The SEC states: “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.” Loblaw is now trading at $119.50, well above the mini-tender price of $111.11. We continue to see the stock as a buy. The bid by TRC Capital (which has nothing to do with Loblaw’s management) is best ignored. For further…