13.1.2.1. Partial Tender Offers
A partial tender offer (a tender offer for less than 100% of shares outstanding) creates the possibility that shareholders may tender more total shares than the offeror wants to purchase. If this happens, offerors typically must purchase shares on a pro rata basis. For example, if 100,000 shares are tendered on an offering of 80,000 shares, the offeror will purchase 80% of tendered shares. Therefore, it must purchase 80% of the shares tendered by each tenderer. It cannot choose to purchase 100% from one tenderer, 60% from another, and none at all from a third.
Partial tender offers are vulnerable to manipulation tactics that the SEC has moved to block. The two major prohibited tactics are short tendering and hedged tendering. An investor is said to have engaged in short tendering if the investor tenders more shares than he actually owns, because he thinks that only a certain percentage of th