Cognizant asks shareholders to reject mini-tender offer from TRC Capital

BENGALURU: Cognizant Technology Solutions on Monday asked shareholders to unanimously reject a ' mini-tender' offer from little known private firm TRC Capital, which has offered to buy 2-million shares of Class-A common stock of the Teaneck, New Jersey-based company.

In a filing to stock exchanges, Cognizant said it did not endorse TRC's "unsolicited" mini-tender offer and urged shareholders to reject the offer, which was priced at about 4.34% below the closing share price of Cognizant's Class-A common stock on March 8.

A mini-tender offer typically refers to bids that offer to buy out less than 5% of a company's outstanding stock or a minority share — a practice that allows the offering parties or companies to avoid standard US Security and Exchange Commission (SEC) disclosure procedures for tender offers.



Cognizant said the SEC's investor guide on mini-tender offers "advises that mini-tender offers have been increasingly used to catch investors off-guard and that investors may end up selling their securities at below-market prices". Over the past few months, TRC Capital has made similar such mini-tender offers to buy out stock in a number of Fortune 500 companies such as Walmart Stores and Lowe's.

"TRC has made many similar unsolicited mini-tender offers for stock of other public companies. Like its other offers, this offer puts individual investors at risk because they may not realise that they are selling their shares at a discount.

The company urges investors to get current quotes for their stock, consult their financial advisors and exercise caution with respect to TRC's offer," Cognizant said.

Cognizant asked shareholders to not take any sort of action in response to TRC's offer. Cognizant's shares closed up 2.8% at $56.97 on Friday on the Nasdaq.