tender offer

A tender offer is an offer to purchase a company's shares at a specified price within a certain timeframe. Large companies or private equity firms looking to acquire a target company generally make this offer.

  • Tender offers are usually made public, and shareholders can accept or reject the offer.
  • If most of the shareholders accept the offer, the company will be acquired.

These offers can serve as a strategic tool for engaging in merger and acquisition activities. Beyond acquisitions, they can also facilitate actions like taking a company private or enhancing shareholder value. Tender offers are subject to regulation by securities laws in most jurisdictions.

  • Tender offers can be categorized as hostile or friendly, depending on the approach taken by the acquiring entity.
  • In hostile tender offers, the target company is typically caught off guard as they are unaware of the offer until it is made public.
  • Conversely, in friendly tender offers, the target company is usually consulted and informed before the offer is made public, fostering a more cooperative acquisition process.

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