How it works (Example):
In a traditional tender offer, a company offers to repurchase shares of stock from its investors at a certain price per share. In a mini-tender, or mini-tender offer, a third-party investor offers to buy up to 5% of a given company from the company's existing shareholders.
For example, suppose Fund ABC, an institutional investor, wishes to take a 5% stake in Company XYZ. Fund ABC would announce a mini-tender in which it offers Company XYZ's shareholders an opportunity to sell their shares to Fund ABC at a specific price by a definite date.
Why it Matters:
Unlike traditional tender offers, mini-tenders are not subject to SEC filing regulations. As a result, investors are strongly advised to consider their terms carefully. Mini-tenders frequently offer below-market pricing and do not give stockholders the option of withdrawal prior to the deadline date.