Odd Lot Tender Offer Heska Corp

[MVP444300]

This company is only expected to be able to purchase 43,000 shares or $365,000.00

 

Current stock price $7.85

 

Tender offer $8.50

 

At current prices Profit $0.65 or 8% before tax.

 

On my brief glance I didn't see when the offer would expire and I won't be investing it with it being such a tiny position.  But it does show its good to pay attention to tender offers for descent returns on money.  Does anyone else ever look at these as special situations as investments?  If so what have your results been?

 

Downside:

 

Can't make any sizable purchase (only few hundred bucks) from what I read and have to be a record holder as of Aug 21st to qualify. 

 

I'm not sure what their purpose is behind making such a small offer with it representing less than 1% of shares outstanding.

 

 

http://www.sec.gov/Archives/edgar/data/1038133/000119312512368833/d400554dsctoi.htm

 

http://www.heska.com/About-Heska/Press-Center/HESKA-CORPORATION--ANNOUNCES-ODD-LOT-TENDER-OFFER.aspx

 

LOVELAND, CO, August 27, 2012 -- Heska Corporation (NASDAQ:HSKA - News; "Heska" or the "Company"), a provider of advanced veterinary diagnostic and other specialty veterinary products, announced today that it has commenced an "odd-lot" tender offer to purchase all shares of its common stock held by stockholders who owned, of record or beneficially, 99 or fewer shares as of the close of business on August 21, 2012 and who continue to hold such shares through the expiration of the offer.  The Company is offering to pay $8.50 for each share properly tendered by an eligible stockholder.

The Company's principal purposes in making the offer are:

 

    To utilize a portion of its available cash in an effective manner to return value to its stockholders at a price per share that is attractive to the Company at the time of the offer and that is consistent with the Company's previously disclosed dividend and stock buyback practices and permissible under the current terms of the Company's credit agreement with Wells Fargo Bank, N.A., and

    To provide its stockholders owning 99 or fewer shares as a result of the Company's December 2010 reverse stock split, or otherwise, the opportunity to obtain liquidity in their shares while incurring potentially lower transaction expenses than would be expected to be incurred by them if their shares were sold on the open market.

 

 

The Company estimates that approximately 40% of the positions in the Company's stock have 99 or fewer shares.  The Company estimates that approximately 43 thousand shares are held in positions of 99 or fewer shares, which represents the maximum number of shares the Company estimates it could purchase under the tender offer.

 

Parties interested in complying with the Company's 5-percent holder transfer restriction should be aware the Company had 5,349,784 shares outstanding on August 24, 2012, which would be reduced to 5,306,784 shares outstanding if all shares discussed in the previous paragraph were to be purchased under the tender offer.

 

Stockholders and investors are urged to read the Company's Schedule TO filed today with the Securities and Exchange Commission (the "SEC") in connection with this tender offer, which includes the offer to purchase.  These materials contain important information with respect to the offer including the various terms and conditions of the offer.  Investors may obtain copies of the Company's Schedule TO from the SEC at no charge by visiting the SEC's website (www.sec.gov).  Heska shareholders with questions or requests for documents may also call the Company's information agent in this matter, Morrow & Co., LLC, at (800) 607-0088.

 

This press release is for informational purposes only and is not an offer to buy or a solicitation of an offer to sell any shares of the Company's common stock.  The offer is being made solely pursuant to the offer to purchase and the accompanying documents, including the letter of transmittal, each dated August 27, 2012.  The offer will expire at 5:00 p.m. Eastern time on October 2, 2012, unless otherwise extended or earlier terminated.  Eligible stockholders who would like to accept the offer must tender all shares that they own.  Partial tenders will not be accepted.

[writser]

to purchase all shares of its common stock held by stockholders who owned, of record or beneficially, 99 or fewer shares as of the close of business on August 21, 2012

 

I saw this tender offer as well, can anybody explain the clause about 21 August? Does that mean we are not eligible to accept the tender offer? Do brokers even allow you to tender and does Heska have any way to find out who where shareholders at that date?

[Hielko]

I'm not sure what their purpose is behind making such a small offer with it representing less than 1% of shares outstanding.

That's easy, it's not to buy back shares, but to reducing administrative expenses (for example sending annual reports). They also might want to delist if they have less than 300 share holders of record after cashing out odd lot holders.

[craigatk]

to purchase all shares of its common stock held by stockholders who owned, of record or beneficially, 99 or fewer shares as of the close of business on August 21, 2012

 

I saw this tender offer as well, can anybody explain the clause about 21 August? Does that mean we are not eligible to accept the tender offer? Do brokers even allow you to tender and does Heska have any way to find out who where shareholders at that date?

 

I was involved in a number of deals like this a few years ago. There used to be quite a community at fat pitch financials that shared deal info and kept track of all the potential opportunities.  As I recall there used to be quite a lot of "your mileage may vary" when it comes to the date keeping on these deals.

 

If the purposes of the transaction is to go private, they need to get the shareholder's count below 300 and thus the "ownership record date" can often be overlooked by management because regardless they want to get rid of you as a shareholder. This transaction doesn't say it is a going-private deal, but seems to be mainly about removing the odd-lot shareholders and they have capped the number of tendered shares at exactly their estimated number of odd-lot shares. Management in this case, can get from the transfer agent a list of owners as of August 21 and if you are not on the list you may or may not be filled.  They may or may not enforce that rule, depending on their own circumstances, available cash, or tender limits.

 

As with all investing, you have to size up all these potential risks. If it was me, I'd pass on this one: 1.) the date is past already, 2.) the very small size of the number of shares which is explicitly capped, 3.) unclear motivation for management to do this deal ...  indicate to me potential problems if you initiate after the record date.

 

I remember reading some conversations where one individual had multiple accounts open with Fidelity and participated with all their accounts (I remember he had an excessive number of accounts - maybe 50?) in odd-lot deals. I also remember people finding deals like this one where the date was in the past and still trying their luck (and getting filled with their tender). Whether or not it was because management didn't care or whether their broker back-dated some paperwork, I couldn't say.

[biaggio]

I'm not sure what their purpose is behind making such a small offer with it representing less than 1% of shares outstanding.

That's easy, it's not to buy back shares, but to reducing administrative expenses (for example sending annual reports). They also might want to delist if they have less than 300 share holders of record after cashing out odd lot holders.

 

So what happens in the case that you re a smaller shareholder but not a odd lot holder, so you end up being one of the <300 shareholders and they do intend to de-list or go private? Assume you want to remain a shareholder.