AC announces terms of the $500 million issuer bid. The offer is a modified Dutch Auction at a price range $18.50 - $21.00, its not clear to me what price one can tender their shares . Please explain it to me simply.. Thanks , George
Investors can choose an exact price at which they are willing to sell, or choose the 'clearing' option and take what everyone else gets. The actual price paid will be the lowest price at which the company can buy all $500M worth of shares. In other words, if investors ONLY chose $21, that would be the price. But, it won't work that way. Some investors and institutions will accept a lower price. The clearing price will likely be somewhere in the middle, maybe $19.50 or $19.75. It depends on shareholders here. Note also that the auction will be pro-rata. If an investor tenders 1,000 shares, it is very likely that only a portion of those will be bought. Again, this depends on how many shareholders participate. In most cases, we suggest not tendering. Companies doing these auctions believe their shares are mis-priced, and in this case AC is willing to spend half a billion dollars on that thesis.