The Estée Lauder Companies Inc. Recommends Stockholders Reject “Mini-Tender” Offer by TRC Capital Investment Corporation And Do Not Tender Shares

Rhea-AI Summary

The Estée Lauder Companies Inc. (NYSE: EL) has issued a warning to its stockholders regarding an unsolicited 'mini-tender' offer from TRC Capital Investment TRC is attempting to purchase up to 1,500,000 shares (approximately 0.64%) of EL's Class A common stock at $83.65 per share in cash. Estée Lauder strongly recommends against tendering shares, citing that the offer price is below the current market value and subject to numerous conditions.

The company emphasizes that it is not associated with TRC or this offer. Estée Lauder warns that mini-tender offers (seeking less than 5% of shares) can bypass SEC disclosure and procedural requirements designed to protect investors. The SEC has cautioned about such offers potentially catching investors off guard with below-market prices. Stockholders are advised to obtain current market quotations and consult with financial advisors before considering the offer.

Positive

• None.

Negative

• Unsolicited mini-tender offer may confuse or mislead shareholders
• Offer price of $83.65 per share is below current market value
• Potential risk of shareholders selling at unfavorable prices

Insights

Financial Analyst

TRC Capital's unsolicited mini-tender offer for 1,500,000 shares (0.64% of outstanding Class A stock) at $83.65 per share is a classic predatory tactic. The offer price is deliberately set below market value, hoping to capitalize on uninformed investors. This move doesn't significantly impact Estée Lauder's financial position, but it's important for shareholders to be vigilant. The company's strong stance against the offer and guidance to stockholders demonstrate good corporate governance. From an investor's perspective, this news underscores the importance of staying informed about current market prices and being cautious of unsolicited offers. While not directly impacting Estée Lauder's financials, it highlights the need for investor education in navigating such predatory practices in the market.

Legal Expert

Estée Lauder's response to TRC Capital's mini-tender offer is a textbook example of proper corporate defense. By promptly alerting shareholders and providing SEC resources, the company is fulfilling its fiduciary duty. The mini-tender offer's structure, targeting less than 5% of shares, is designed to circumvent SEC regulations that protect investors in larger tender offers. This legal loophole exploitation by TRC Capital is concerning but not uncommon. Estée Lauder's recommendation against tendering shares and its dissemination of SEC guidance serve as important investor protection measures. From a legal standpoint, while the offer itself isn't illegal, it treads a fine line of ethical business practices, potentially exposing unsophisticated investors to financial risk.

Market Research Analyst

TRC Capital's mini-tender offer for Estée Lauder shares is a strategic market maneuver that preys on information asymmetry. By offering $83.65 per share, likely below current market value, TRC aims to profit from potential market inefficiencies or investor inattention. This tactic, while legal, often targets companies with strong brand recognition like Estée Lauder. The cosmetics giant's robust response indicates a proactive approach to shareholder protection. For the broader market, this incident serves as a reminder of the importance of investor education and the potential vulnerabilities in current securities regulations. It also highlights the ongoing challenge for regulators in balancing market freedom with investor protection, especially in an era of increasingly sophisticated financial instruments and strategies.

NEW YORK--(BUSINESS WIRE)-- The Estée Lauder Companies Inc. (NYSE: EL) (the “Company”) today announced that it has received notice that TRC Capital Investment Corporation (“TRC”) commenced an unsolicited “mini-tender” offer to purchase up to 1,500,000 shares of the Company’s Class A common stock, which represents approximately 0.64% of the outstanding Class A common stock, at a price of $83.65 per share in cash.

The Company does not endorse TRC’s unsolicited mini-tender offer and recommends that stockholders do not tender their shares because TRC’s offer is at a price below the current market price for Class A common stock and is subject to numerous conditions. The Company is in no way associated with TRC, its mini-tender offer, or the mini-tender offer documents.

Mini-tender offers seek to acquire less than 5% of a company’s shares outstanding. Consequently, they can avoid many of the disclosure and procedural requirements of U.S. Securities and Exchange Commission (“SEC”) rules intended for the protection of stockholders, which would apply to offers for more than 5% of a company’s shares.

The SEC has cautioned investors that “some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price” and that investors “may end up selling their securities at below-market prices.” The SEC’s guidance to investors on mini-tender offers is available at http://www.sec.gov/investor/pubs/minitend.htm. TRC has made many similar unsolicited mini-tender offers for shares of other public companies at below market prices.

Stockholders should obtain current market quotations for their shares, consult with their broker or financial advisor, and exercise caution with respect to TRC’s mini-tender offer, including monitoring for any amendment by TRC of its offer. The Company recommends that stockholders who have not responded to TRC’s offer take no action. According to TRC’s offer documents, stockholders who have already tendered their shares may withdraw them by providing the notice described in the documents prior to the expiration of the offer, which is currently scheduled to occur on October 9, 2024. TRC may extend the offering period at its discretion.

The Company encourages brokers and dealers, as well as other market participants, to review the SEC’s letter regarding broker-dealer mini-tender offer dissemination and disclosure at http://www.sec.gov/divisions/marketreg/minitenders/sia072401.htm.

The Company requests that a copy of this press release be included with all distributions of materials relating to TRC’s mini-tender offer related to shares of the Company’s Class A common stock.

About The Estée Lauder Companies

The Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products, and is a steward of luxury and prestige brands globally. The Company’s products are sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, the DECIEM family of brands, including The Ordinary and NIOD, and BALMAIN Beauty.

ELC-F

View source version on businesswire.com: https://www.businesswire.com/news/home/20240916283313/en/

Investors: Rainey Mancini

rmancini@estee.com

Media: Jill Marvin

jimarvin@estee.com

Source: The Estée Lauder Companies Inc.

FAQ

What is the mini-tender offer for Estée Lauder (EL) stock?

TRC Capital Investment has made an unsolicited mini-tender offer to purchase up to 1,500,000 shares (about 0.64%) of Estée Lauder's Class A common stock at $83.65 per share in cash.

Does Estée Lauder (EL) recommend accepting the mini-tender offer?

No, Estée Lauder strongly recommends that stockholders do not tender their shares, as the offer price is below the current market price and the offer is subject to numerous conditions.

When does TRC's mini-tender offer for Estée Lauder (EL) expire?

According to the offer documents, TRC's mini-tender offer is currently scheduled to expire on October 9, 2024, though TRC may extend this period at its discretion.

Can shareholders withdraw from TRC's mini-tender offer for Estée Lauder (EL)?

Yes, stockholders who have already tendered their shares can withdraw them by providing the notice described in TRC's offer documents before the offer's expiration date.