Tender offer

Tender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer (usually announced in a newspaper advertisement) by an acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares. In tender offers, the bidder contacts shareholders directly, inviting them to sell their shares at an offer price. The directors of the company may or may not have endorsed the tender offer proposal. In the United States, tender offers are regulated by the Williams Act.

To induce the shareholders of the target company to sell, the acquirer's offer price usually includes a premium over the current market price of the target company's shares. For example, if a target corporation's stock were trading at a value of $1/share, an acquirer might offer $1.15/share to its shareholders on the condition that 51% of shareholders agree. Cash or other securities may be offered to the target company's shareholders as consideration, although a tender offer in which securities are offered as consideration is generally referred to as an "exchange offer."


In the United States, SEC [http://www.law.uc.edu/CCL/34ActRls/reg14E.html Regulation 14E] governs tender offers. It covers such matters as:
1. The minimum length of time a tender offer must remain open
2. Procedures for modifying a tender offer after it has been issued
3. Insider trading in the context of tender offers
4. Whether one class of shareholders can receive preferential treatment over another

Required Disclosures

In the United States, under the Williams Act, codified in Section 13(d) and Section 14(d)(1) of the Securities Exchange Act of 1934, a bidder must file a Schedule TO with the SEC upon commencement of the tender offer. Among the matters required to be disclosed in the Schedule TO are: (i) a term sheet which summarizes the material terms of the tender offer in plain English, (ii) the bidder's identity and background, and (iii) the bidder's history with the target company. In addition, a potential acquirer must submit a Schedule 13d filing within 10 days of acquiring more than 5% of the shares of another company.

Taxable Event

The consummation of a tender offer resulting in payment to the shareholder is a taxable event triggering capital gains or losses, which may be long-term or short-term depending on the shareholder's holding period.

ee also

* Mergers and acquisitions
* Mini-tender offer
* Bond exchange offer


* [http://www.sec.gov/answers/tender.htm SEC FAQ on Tender Offers]
* [http://www.law.uc.edu/CCL/34ActRls/reg14E.html SEC regulations governing tender offers]
*J.Fred Weston, Mark L.Mitchell, J.Harold Mulherin , Takeovers, Restructuring, and Cprporate Governancecorporate finance and investment banking

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Look at other dictionaries:

  • tender offer — n: a public offer to purchase a specified number or range of shares from shareholders usu. at a premium and in an attempt to gain control of the issuing company Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. tender offer …   Law dictionary

  • tender offer — n. a public offer to purchase a block of stock in a corporation, often the controlling interest, within a specified period and at a stipulated price, usually well above the existing market price …   English World dictionary

  • tender offer — General offer made publicly and directly to a firm s shareholders to buy their stock at a price well above the current value market price. Bloomberg Financial Dictionary A means of implementing an offer for subscription or offer for sale. The… …   Financial and business terms

  • Tender offer — General offer made publicly and directly to a firm s shareholders to buy their stock at a price well above the current market price. The New York Times Financial Glossary * * * tender offer tender offer ➔ offer2 * * *    A company making a tender …   Financial and business terms

  • tender offer — noun an offer to buy shares in a corporation (usually above the market price) for cash or securities or both • Hypernyms: ↑offer, ↑offering • Hyponyms: ↑takeover bid * * * a public offer to purchase stock of a corporation from its shareholders at …   Useful english dictionary

  • tender offer — 1) An offer by one company to buy the shares of another from the shareholders at a stated price (usually at a premium above the market price). It is normally made as part of a takeover bid See also self tender; two tier tender offer 2) See issue… …   Big dictionary of business and management

  • tender offer — acquisition offer / take over offer / purchase offer / buyback offer An offer made to shareholders, normally by a third party, requesting them to sell (tender) or exchange their equities …   Euroclear glossary

  • Tender Offer — An offer to purchase some or all of shareholders shares in a corporation. The price offered is usually at a premium to the market price. Tender offers may be friendly or unfriendly. Securities and Exchange Commission laws require any corporation… …   Investment dictionary

  • tender offer — noun Date: 1967 a public offer to buy not less than a specified number of shares of a stock at a fixed price from stockholders usually in an attempt to gain control of the issuing company …   New Collegiate Dictionary

  • tender offer — a public offer to purchase stock of a corporation from its shareholders at a certain price within a stated time limit, often in an effort to win control of the company. [1960 65] * * * …   Universalium

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