Equitable Holdings, Inc. Announces Tender Offer for All Series B Depositary Shares
Equitable Holdings, Inc. (“Holdings”) (NYSE: EQH) has officially announced a tender offer for the entirety of its outstanding 444,333 depositary shares, referred to as the “Series B Depositary Shares.” Each of these shares represents a 1/25th interest in a share of the company’s 4.950% Fixed Rate Reset Noncumulative Perpetual Preferred Stock, Series B.
The Series B Preferred Stock has a CUSIP number of 29452E AA9, a par value of $1.00 per share, and a liquidation preference of $25,000 per share, translating to $1,000 per Series B Depositary Share. The tender offer is being extended in accordance with the Offer to Purchase document dated March 12, 2025, alongside an accompanying Letter of Transmittal. The full terms and conditions of this offer are detailed within these documents.
Under the conditions outlined in the Offer to Purchase, which includes a financing condition, Holdings is proposing to pay a purchase price of $1,000 per Series B Depositary Share. In addition, Holdings will include an amount equal to accrued, unpaid, and undeclared dividends on the underlying Series B Preferred Stock from December 15, 2024, up to, but excluding, the settlement date of the tender offer. At present, Holdings expects the settlement date to be April 11, 2025, though this remains subject to various conditions.
The tender offer is set to expire at 5:00 p.m. (New York City time) on April 9, 2025, unless Holdings decides to extend or terminate it earlier. Shareholders must submit their Series B Depositary Shares before the expiration date to be eligible for the purchase price offered. However, shareholders may withdraw their tenders at any point before the deadline, following the specific procedures described in the Offer to Purchase and the accompanying Letter of Transmittal.
To fund the payment required for the tender offer, Holdings intends to utilize net proceeds from an offering of junior subordinated debt securities, known as the “Junior Subordinated Debt Securities Offering.” If necessary, additional funds may come from the company’s cash reserves. It is important to clarify that any information included in this announcement, the Offer to Purchase, or the Letter of Transmittal regarding junior subordinated debt securities does not constitute an offer to sell or solicit an offer to purchase such securities.
In terms of allocation, Holdings will assess various factors when determining the distribution of the junior subordinated debt securities in connection with the Junior Subordinated Debt Securities Offering. One such factor includes whether an investor who is seeking an allocation has previously tendered, or formally expressed an intent to tender, their Series B Depositary Shares before the allocation process. Furthermore, Holdings will take into account the aggregate liquidation preference of the Series B Depositary Shares that the investor has either tendered or indicated an intention to tender.
Consequently, investors who wish to subscribe to the junior subordinated debt securities, in addition to tendering their Series B Depositary Shares, may qualify for priority consideration in the allocation of these securities. However, this priority is granted solely at the discretion of Holdings.
It should be noted that Holdings has no obligation to allocate junior subordinated debt securities to a holder who has validly tendered or expressed an intent to tender their Series B Depositary Shares. Furthermore, even if an allocation is made, the principal amount of junior subordinated debt securities allocated may either exceed or fall short of the total liquidation preference of the Series B Depositary Shares tendered by that particular holder. Any interested investor must submit a separate application for the purchase of junior subordinated debt securities to the managing book-runners responsible for issuing the securities. This application must adhere to the standard new-issue procedures established by these book-runners.
Background and Implications of the Tender Offer
This tender offer forms part of Equitable Holdings’ broader strategic initiatives. Such actions are often undertaken to optimize capital structures, enhance financial flexibility, or manage outstanding securities in a way that aligns with the company’s long-term objectives. By executing this repurchase, Holdings is providing an opportunity for Series B Depositary Shareholders to receive liquidity for their holdings at a fair value.
Preferred stockholders typically receive fixed dividends and enjoy a higher claim on assets compared to common stockholders. However, the noncumulative nature of Holdings’ Series B Preferred Stock means that any missed dividend payments are not accrued or owed to investors in the future. In this context, the tender offer allows Holdings to streamline its financial liabilities while giving shareholders an option to exit their positions at a predetermined price.
Market Response and Financial Strategy
The announcement of the tender offer may have implications for investors and analysts monitoring Equitable Holdings’ financial decisions. Investors may interpret this move as a way for the company to reduce preferred stock obligations while securing financing through junior subordinated debt securities. The use of debt markets to finance such transactions suggests confidence in Equitable Holdings’ ability to manage its financial commitments efficiently.
Furthermore, such tender offers can impact stock performance, particularly if investors believe that reducing outstanding preferred stock will improve overall financial health. Market participants will likely observe how this tender offer unfolds and whether it influences Holdings’ stock price and credit ratings.
Considerations for Shareholders
Shareholders contemplating participation in the tender offer should carefully review the Offer to Purchase and the accompanying Letter of Transmittal. Key factors to consider include:
- Purchase Price: The offer provides $1,000 per Series B Depositary Share, along with accrued, unpaid, and undeclared dividends.
- Deadline: The tender offer expires at 5:00 p.m. (New York City time) on April 9, 2025, with a projected settlement date of April 11, 2025.
- Withdrawal Rights: Investors retain the right to withdraw their tendered shares at any time before the expiration date.
- Financing Considerations: Holdings will use proceeds from the Junior Subordinated Debt Securities Offering, with cash on hand as a supplementary source if required.
- Potential Allocation of Junior Subordinated Debt Securities: Investors who tender their shares may receive priority in the debt securities allocation, though this remains at Holdings’ discretion.
Equitable Holdings, Inc. has initiated a structured tender offer for its outstanding Series B Depositary Shares, providing investors with an opportunity to liquidate their holdings at a specified price. The offer forms part of a broader financial strategy that involves issuing junior subordinated debt securities to finance the repurchase. While the transaction offers potential benefits to investors and the company alike, it is crucial for shareholders to evaluate the terms and implications before making a decision.
For further details, investors are advised to refer to the Offer to Purchase and the Letter of Transmittal, which outline all the relevant procedures and conditions. The tender offer represents a significant financial event for Equitable Holdings, reflecting its ongoing efforts to optimize capital allocation and maintain financial stability.
