You have identified the real reason for the tender offer portion of the buy-back. It gives the institutions an opportunity to sell a substantial number of shares at a premium to the market price. If they tried to sell them in the open market, they would drive the price down.
The tender portion of the by-back would be a non-event if everyone tendered all their shares. It would then act as a sort of special dividend combined with a reverse stock split. If the tender price were at the same price that the shares traded at prior to the tender, then the post-tender price would be the same as the pre-tender price. But when the tender is at a premium price, the post-tender price will be correspondingly less. That is why every shareholder must tender all their shares in order to protect their position.
Agree, it will increase future EPS and WILL create a short term floor of $10 for the stock. How much has negative sentiment hurt the stock over the past few months? While I'm sure this should be above 10 right now, how much higher can it reasonably go. Whenever it gets in the high 10s / low 11s it tends to sell-off hard.
While sales can't keep increasing for SWHC, EPS should remain stable for at least 2 more QTRs and the massive stock buyback will definitely help. Based on 4th QTR earnings this stock is currently undervalued by at least 10%.