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10-12-2010, 07:57 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
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Tender Offer
I received a letter from VG Brokerage Services yesterday stating that one of the companies I own was doing a tender offer for the shares I owned & to reply by 'x' date.
I haven't called VG to get the details but is there anything else to it other than the company wanting to buy back shares? Any motive aside from that? I am assuming the incentive is either a small % above market or they guarantee a price maybe? Anyone have experience with TOs and if so, what did you do?
- Thanks
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10-12-2010, 08:41 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
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Depends. You probably should read the prospectus/literature from the company. Some REITs TO cumulative preferred shares because the company could not pay the dividends that were in arrears.
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JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
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10-13-2010, 06:11 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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What company is it?
Usually companies do this stuff because they want to retire a bunch of shares (or debt or...) all at once rather than messing around with open market purchases. The most common structure I have seen is a modified dutch auction wheere they offer to buy $X of shares at a price between Y and Z per share. You can submit with a specific min price or just take what everyone else gets. The lowest price that gets them $X of shares is the price everyone gets.
So should you tender? If you were looking to sell anyway and you likethe price offered, its worth considering. I have owned two stocks which have done tender offers and passed on both. In both cases it turned out to be a good choice (the stock rose above the tender price range), but nothing is guaranteed.
Heh, "tender offer." Sounds like something you make to a lady of negotiable affection our for her evening constitutional.
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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10-13-2010, 07:45 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
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Stable big cap healthcare products company that has been beaten up over the last few years despite the rally off the bottoms
I didn't make a big move @ the bottoms just b/c I don't think the future is always as clear for those types of companies
So even if I hold, any share appreciation above what I have now won't move the portfolio too much but I still think it is still a decent value today
"I have owned two stocks which have done tender offers and passed on both. In both cases it turned out to be a good choice (the stock rose above the tender price range), but nothing is guaranteed."
I was kind of wondering how people have done who decided not to tender. Thanks.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
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10-13-2010, 07:59 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by wildcat
I was kind of wondering how people have done who decided not to tender. Thanks.
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Personally, I view the tender offer as a modest plus, but evaluate it like any other offer to buy my shares: is this a full valuation such that I would be happy to sell? Never seen a tender offer at what I would regard for full value of what I own.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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