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Altria recommends shareholders reject TRC Capital's mini-tender offer

U.S. tobacco giant Altria Group Inc. on Sept. 18 said it has become aware of an unsolicited mini-tender offer by TRC Capital Corp. and urged its shareholders to reject the bid.

TRC Capital is offering to purchase in cash up to 3,000,000 shares, which represent less than 0.2% of Altria's common stock, at $44.25 per share for a total consideration of about $132.8 million. The offer price represents a 7.12% premium to the company's closing price of $41.31 on Sept. 17.

Altria said that while TRC's offer is higher than the current market price of Altria shares, it is subject to conditions that the company believes are unlikely to be satisfied at current prices.

"In particular, TRC's offer is conditioned on there having been no decrease in the market price of Altria common stock which, in TRC's reasonable judgment, would make it inadvisable for TRC to proceed with the offer," the tobacco company said.

Other conditions of the mini-tender offer include TRC being able to secure funding for the offer, which is scheduled to expire 12:01 a.m., New York City time on Sept. 25.

Altria also cautioned shareholders that TRC can extend the offer and delay payment beyond the scheduled expiration of the offer. It added that the SEC has previously advised against mini-tender offers on its website, saying these offers "have been increasingly used to catch investors off guard" and that investors "may end up selling their securities at below-market prices."

In the past, TRC has launched mini-tender offers for shareholders of consumer companies like PepsiCo Inc., Church & Dwight Co. Inc., The TJX Companies Inc. and Walgreens Boots Alliance Inc. The companies have also recommended against the offers, citing various reasons.

Altria's stock closed down 1.14% to $40.84 on Sept. 18.

The maker of Marlboro cigarettes is in talks to reunite with Philip Morris International Inc., which it spun off in 2008. The combined company is expected to be valued at more than $187.63 billion based on their current market capitalization.