tenderoffer

A tender offer is a public, unilateral proposal by a person or company to purchase some or all of the shares of a target company at a specified price for a defined period. It is typically directed at shareholders and often includes a premium to the current market price to encourage sales.

Mechanics and terms commonly involve cash, securities, or a combination as the form of payment; a stated offer price; an acceptance period; and conditions such as a minimum or maximum number of shares to be tendered. If more shares are tendered than requested, proration may occur, allocating accepted shares proportionally. Shareholders decide independently whether to tender their shares.

Tender offers are commonly used in takeover attempts, by activists seeking influence or control, or by a company or investor seeking to change its ownership mix. They can be full or partial; a partial offer may allow tendering of only a portion of holdings. A self-tender is an offering by the target company to buy back its own shares from shareholders.

Regulatory and disclosure frameworks govern tender offers in many jurisdictions. In the United States, tender offers for listed securities are regulated under the Williams Act, requiring advance disclosure (such as the offer terms, purpose, and financing) and ongoing communications, with fiduciary duties guiding decisions by the target’s board. Other countries have similar rules and exchange requirements.

Outcomes of a tender offer can influence the target’s stock price and corporate governance. They may trigger defensive measures or prompt restructuring, financing considerations, and regulatory reviews. Investors should consider risks such as price volatility, acceptance risk, and potential changes in control and strategy.