October 19, 2007 9:57 AM PDT

AMD urges investors to reject mini-tender offer

AMD urges investors to reject mini-tender offer
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Advanced Micro Devices warned investors Friday to stay clear of an unsolicited mini-tender offer by TRC Capital, which is seeking to buy less than 1 percent of AMD's outstanding shares at below its current market value.

TRC Capital, which has a reputation for launching mini-tender offers for a number of corporations, from Sun Microsystems in 2004 to Halliburton in 2004 to Abbott in 2006, is offering to buy up to 5 million shares of AMD at $13.25 per share. The offer represents 0.9 percent of outstanding AMD shares.

AMD shares closed at $14.55 on Thursday, prior to the announcement of its third-quarter results. But despite beating analysts' estimates on revenue growth and posting a narrower-than-expected loss, AMD shares were down Friday morning to about $13.82 a share.

The chipmaker reported revenue of $1.63 billion, up 23 percent from a year ago, while its net loss reached $396 million, versus a net profit of $136 million the previous year.

As with its other mini-tender offers, which involve less than a 5 percent stake in a company, TRC Capital is offering AMD shareholders less money to trade in their stock than they could currently get on the open market. The Securities and Exchange Commission cautions investors to be wary of such offers.

"Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price," according to an SEC advisory. "With most mini-tender offers, investors typically feel pressured to tender their shares quickly without having solid information about the offer or the people behind it. And they've been shocked to learn that they generally cannot withdraw from mini-tender offers."

But in the case of AMD shareholders who have already tendered their shares to TRC Capital, they may withdraw those shares with a written notice to TRC, providing it's done before 9:01 p.m. PDT on November 9, according to AMD.

The SEC also notes mini-tender offers usually do not provide the same level of disclosures, or protections, that traditional tender offers contain. Entities that are launching a tender offer for more than 5 percent of a company are required to disclose critical information about themselves and terms of the offer, according to the SEC.

Phone calls to Lorne Albaum, chief executive of TRC, were not returned.

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3 comments

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below market value???
I'm not the smartest investor out there by any stretch but why on earth would anyone sell their shares at below market value? on top of that - how on earth are people buying stock without knowing the price, p/e or growth potential? its like buying a car and then selling it for 1/2 price the next day because someone offered to buy it. its not like berkshire shares that so few people can afford them or something!!
Posted by hitman247 (5 comments )
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The first thought that came to my mind was that perhaps institutional
investors (eg mutual funds) may want to offload some shares without triggering a decline by putting a huge block on sale. But this offer looks more fishy than that.
Posted by Tsee-1968031069905097881578618 (45 comments )
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Re: Below market value???
It seems like just another of a million attempts to take advantage of people.

I agree that people probably shouldn't be investing without some knowledge of what they're doing, however, it doesn't give a company the right to try to take advantage of people's lack of knowledge.

Action like this should be outright illegal.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
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