Chapter Thirteen
Tender Offers
As discussed in Chapters 1 and 11, a tender offer is a type of stock purchase consisting of an open solicitation to purchase a significant percentage of a target company’s common shares outstanding from existing shareholders, often for more than market price. There are also tender offers for bonds or preferred stock, but we will focus on tender offers for common stock. The party conducting the tender offer is referred to as the offeror, or sometimes the bidder. The shares the offeror wishes to purchase are sometimes called the subject securities.
There are two main reasons for conducting a tender offer. First, a third-party tender offer may be conducted because the offeror is trying to acquire the target. A third-party tender offer is one in which the offeror is some party other than the issuer of the securities. Second, a company may wish to reduce its number of shares outstanding, and one way to accomplish this is to co