Science Applications International Corporation (SAIC), a leading technology integrator, has alerted shareholders of an unsolicited "mini-tender offer" made by TRC Capital Corporation to buy up to 700,000 shares of its common stock at $35.35 each. The offer price represents a discount of $1.78 or 4.79% on SAIC’s closing price of $37.13 on Feb 26, the date on which the offer was made.
TRC Capital, a private equity firm, is known to make such mini-tender offers periodically. Another unsolicited share purchase offer was made just last week to shareholders of Fortis Inc. SAIC urges stockholders to discard the tender offer and advises them to exercise caution. The company recommends shareholders to consult with their financial advisors and evaluate the offer accordingly, as it comes with appended stipulations that can result in termination of the offer. The said conditions include any decrease in the market price of SAIC shares from the price on the offer date and the inability of TRC to obtain financing to fund the offer.
Mini-tender offers account for less than 5% of a company's equity, and are not subject to disclosure and procedural rules that apply to larger tender offers. They also do not provide requisite investor protections as compared to larger tender offers. Mini-tender offers are increasingly being used nowadays to catch investors off-guard and trick them into trading to their own detriment. However, with SAIC acting in the right earnest for its shareholders, such an incident is expected to be avoided by the masses.
SAIC provides technical, engineering and enterprise IT services in the U.S., with its government segment serving the U.S. federal, state and local government agencies as well as foreign governments. The tender offer comes six months after the restructuring of the company, which created the new SAIC and Leidos Holdings Inc. Since then, SAIC has navigated rough terrain, with earnings witnessing a sharp drop during its first quarter as an independent company.
SAIC currently holds a Zacks Rank #3 (Hold). Some other stocks in the industry that look promising and are worth a look include Acxiom Corporation (ACXM), Infosys Ltd. (INFY) and Fair Isaac Corporation (FICO), all of which carry a Zacks Rank #2 (Buy).