CRA International (CRAI) joins the ranks of the many companies participating in a tender offer. The company is offering to purchase up to $30 million of its stock, or between 17% and 18.7% of its outstanding shares, depending on the purchase price. It’s offering to buy at a price between $18 and $19.75 per share. With the stock now at $18.96, after jumping 11% on the news, there’s no risk-free profit here, however, unless the stock drops. With the stock in a long-term downtrend, it looks like many investors may be willing to cash out at the low end of the range. So for those investors looking for a quick buck, it’s probably better to move on. But the CRA International 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 eighty dollars or so, by putting in an ask price at the high end of the range. However, they risk not selling their shares in the offer, and it’s likely the tender goes off closer to 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.
No directors or officers of the company 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. Insiders’ ownership is currently 4.6% and that will increase as a result of tender.
CRA International will pay for the tender offer with cash on hand, more than $38 million, and it still has $123 million available under a credit facility. 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 March 21, 2016 unless extended. You can read further details at this SEC filing, and you can see all the recent tender offers on this page.