Intrawest Tender Offer Sends Stock Soaring

intrawest2Intrawest (SNOW) joins the ranks of the many companies participating in a tender offer. The company is offering to purchase up to $50 million of its stock, or between 11% and 12.3% of its outstanding shares, depending on the purchase price. It’s offering to buy at a price between $9 and $10 per share. With the stock now at $8.50 and bouncing on the news, there’s a chance of only a little risk-free profit here, however. So for those investors looking for a quick buck and who didn’t already own the stock, it’s probably better to move on. But the Intrawest tender offer does have my favorite provision for small shareholders, the odd lot priority.

That is, there is an odd lot priority for up to 99 shares, so investors could take a flyer on the stock and hope that they can make a quick hundred dollars or so, by putting in an ask price of about a dollar higher than their buy price. However, they risk not selling their shares in the offer, and it’s likely the tender goes off at the floor price. That’s not really my style, and I’d prefer something that was nearly risk-free, as in a traditional tender offer at a fixed price. Still, this tender offer would be good if you got a solid $1 spread, and in the current volatile market, anything is possible.

No directors or officers of the company nor the majority shareholder are participating in the tender offer, and that’s generally a good sign for the long-term outlook on the business. Of course, a tender offer itself is usually a good sign that management is looking to create shareholder value. In fact, the insiders’ ownership goes up from 60% to at least 67.5%.

Intrawest will pay for the tender offer with cash on hand, more than $92 million. So it should have no problem affording the purchase even if the maximum number of shares at the high end were tendered. The offer expires on February 10, 2016 unless extended. You can read further details at this SEC filing, and you can see all the recent tender offers on this page.

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