Verizon Communications has recommended that its stockholders reject an unsolicited ‘mini-tender’ that has been offered by Ponos Industries, an entity which is organised under the laws of the Caribbean island of Nevis. Pursuant to the offer, which was dated 26 June 2020, Ponos has offered to purchase up to two million shares of Verizon common stock at USD60.00 per share. While this price is above the current market price of Verizon common stock, the offer is conditioned upon the closing price of Verizon’s shares exceeding the USD60.00 offer price on the New York Stock Exchange (NYSE) on the last full day of trading before the offer expires on 30 July 2020.
Verizon says that unless Ponos waives this condition, Verizon stockholders who tender their shares in the offer will receive a below-market price. The telco urges its investors to obtain current market quotes for their shares of common stock, consult with their financial advisors and exercise caution regarding the offer. Stockholders who have already tendered their shares may withdraw them by providing the written notice described in the Ponos offering documents before the expiration of the offer.
According to guidance on the US Securities and Exchange Commission (SEC) website, mini-tender offers ‘have been increasingly used to catch investors off guard’ and investors ‘may end up selling their securities at below-market prices’. Mini-tender offers seek less than 5% of a company’s outstanding shares, which lets the offering company avoid many disclosure and procedural requirements that the SEC requires for tender offers.