corporate finance Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allo ...
, a tender offer is a type of public
takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to t ...
bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a
publicly traded A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange ( li ...
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and re ...
(the target corporation) to tender their
stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares. In a tender offer, the bidder contacts shareholders directly; the directors of the company may or may not have endorsed the tender offer proposal. To induce the shareholders of the target company to sell, the acquirer's offer price is usually at a premium over the current market price of the target company's shares. For example, if a target corporation's stock were trading at $10 per share, an acquirer might offer $11.50 per share to shareholders on the condition that 51% of shareholders agree. Cash or securities may be offered to the target company's shareholders, although a tender offer in which securities are offered as consideration is generally referred to as an " exchange offer".

Governing law

United States


In the United States of America, tender offers are regulated by the
Williams Act The Williams Act (USA) refers to 1968 amendments to the Securities Exchange Act of 1934 enacted in 1968 regarding tender offers. The legislation was proposed by Senator Harrison A. Williams of New Jersey. The Williams Act amended the Securities ...
. SE
Regulation 14E
also governs tender offers. It covers such matters as: #the minimum length of time a tender offer must remain open #procedures for modifying a tender offer after it has been issued #insider trading in the context of tender offers #whether one class of shareholders can receive preferential treatment over another

Required disclosures

In the United States, under the
Williams Act The Williams Act (USA) refers to 1968 amendments to the Securities Exchange Act of 1934 enacted in 1968 regarding tender offers. The legislation was proposed by Senator Harrison A. Williams of New Jersey. The Williams Act amended the Securities ...
, codified in Section 13(d) and Section 14(d)(1) of the
Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. A landm ...
, a bidder must file Schedule TO with the SEC upon commencement of the tender offer. Among the matters required to be disclosed in 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 file Schedule 13D within 10 days of acquiring more than 5% of the shares of another company.

=Tax consequence

= The consummation of a tender offer resulting in payment to the shareholder is a taxable event triggering
capital gains Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. ...
or losses, which may be long-term or short-term depending on the shareholder's holding period.

See also

* Bond Tender Offer * Bond exchange offer * Mini-tender offer *
Mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
* Contract awarding * List of largest mergers and acquisitions


SEC FAQ on tender offersDavid Offenberg, Christo A. Pirinsky, "How do acquirers choose between mergers and tender offers?" Journal of Financial Economics, 2015.
*J. Fred Weston, Mark L. Mitchell, J. Harold Mulherin, ''Takeovers, Restructuring, and Corporate Governance'' {{corporate finance and investment banking Corporate finance ca:Oferta Pública d'Adquisició fr:Offre publique d'achat ja:株式公開買付け