Sun Life Financial Inc. has become at least the second Canadian-based life insurance company to be hit by an unsolicited mini-tender offer by Obatan LLC, a U.S.-based provider for original commercial mortgage loans.
Sun Life said January 5th that it is cautioning its common shareholders about the unsolicited bid to buy up to 50,000 common shares for US$35 apiece.
Sun Life is not associated with Obatan and does not endorse acceptance of this unsolicited offer. It is alerting shareholders that the Obatan offer is at a price significantly lower than recent market prices for Sun Life shares on both Canadian and U.S. stock exchanges.
Offer almost 20 per cent less than on stock market
The offer represents a discount of 19.90 per cent for the closing price of Sun Life common shares on the TSX and 19.84 per cent for the shares on the NYSE on December 18, 2020, the last trading day before the mini-tender offer began.
Securities administrators in both Canada and the United States recommend investors exercise caution with "mini-tender offers,” which are designed to avoid disclosure and procedural requirements under Canadian and U.S. securities regulations. Securities officials in both countries have expressed serious concerns about such offers, including the possibility that investors might tender to offers without understanding the offer price relative to the actual market price of their securities.
The Securities and Exchange Commission (SEC) has indicated that "bidders make mini-tender offers at below-market prices, hoping they will catch investors off guard if the investors do not compare the offer price to the current market price."
Shareholders can withdraw their tender before February 2
Sun Life says shareholders who have already tendered their shares can withdraw them at any time before 8:00 P.M. Eastern time on February 2, 2021 by following the procedures described in the offer documents.
Shareholders are notified that the terms of the Obatan offer may vary and the cash consideration offered could drop. In such a case, shareholders who have already tendered to the offer may have only limited notice of such a change and limited time to withdraw their shares from the offer. Sun Life says there are also no assurances that Obatan will buy the shares delivered under the offer.
Late last year, Manulife was notified of a similar mini-tender offer by Obatan to buy up to 100,000 of its common shares. It also cautioned its shareholders that the price offered was below that of its market price.