Tender Offer

A tender offer is a public, open offer made by one party (an acquiring company, investor group, or the company itself) to purchase some or all of shareholders' stock at a specified price during a set time period. The offer price is typically set at a premium of 20-50% above the current market price to incentivize shareholders to "tender" (sell) their shares. Tender offers are regulated by SEC rules (specifically the Williams Act) which require disclosure of the acquirer's intentions, funding sources, and plans for the target company. There are two main types: third-party tender offers (hostile or friendly acquisition attempts) and self-tender offers (where a company offers to buy back its own shares). Shareholders can choose to accept or reject the offer. If the tender offer is conditional on receiving a minimum number of shares (typically 50%+ for control), it may fail if not enough shareholders participate. Tender offers are a common mechanism in mergers, acquisitions, and going-private transactions.