Weatherford International plc (WFT), the Swiss provider of equipment for the oil and gas industry, has received an unwanted “mini-tender” offer notification by TRC Capital to acquire up to 5,000,000 shares or about 0.65% of the outstanding ordinary shares of Weatherford at $21.25 per share.
TRC Capital's offer is about 4.3% below Weatherford's closing price of $22.10 on August 18, 2014, the day before the offer. This unsolicited mini-tender offer has not been approved by Weatherford and the company has urged shareholders to reject it.
Weatherford suggests that shareholders who have not replied to TRC Capital should decline the offer by not responding at all. This is mainly because the offer is at a price lower than the current market price of Weatherford shares. The offer is also subject to various conditions such as a fall in the market price of Weatherford's shares, and the ability of TRC Capital to obtain financing on acceptable terms.
The company has also proposed that shareholders who have already tendered shares in TRC Capital’s offer withdraw their stock by presenting a written notice as illustrated in the offering documents prior to the expiry (Thursday, Sep 18, 2014) as stated in the offer.
Notably, TRC Capital has made similar “mini-tender” offers for shares to other companies as well. These are third-party offers that seek to purchase below 5% of a company’s outstanding shares. The process avoids many disclosures and procedural requirements of the Securities and Exchange Commission (SEC.TO) pertaining to offers for over 5% of a company's outstanding shares. As a result, mini-tender offers do not offer investors the same level of protection as offered by larger tender offers under the United States securities laws.
Currently, Weatherford sports a Zacks Rank #1 (Strong Buy). Other stocks to consider in the oil and gas sector include Sanchez Energy Corporation (SN), TransAtlantic Petroleum Ltd. (TAT) and Sunoco Logistics Partners L.P (SXL). All of these have the same Zacks rank as Weatherford and appear rewarding for the short term.