Series 24: Tender Offers

Tender Offers

When a party would like to acquire another company without going through the expense and time that other types of acquisitions require, they may extend a tender offer. A tender offer is an open offer to purchase a large percentage of a company’s outstanding shares from the company’s current shareholders. In a tender offer, the acquiring party offers shareholders a price above the market price of the shares (a premium), and shareholders can choose to tender their shares or not. Tender offers are often contingent on shareholders “tendering” a minimum number of shares, usually a majority or supermajority. The party that is extending the tender offer is usually seeking some kind of control of the company– if they cannot get this control they do not want to go through with