Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Tender Offer

What it is:

A tender offer is a proposal by an investor to all current shareholders of a publicly traded corporation to tender their shares for sale at a certain price at a certain time. 

How it works (Example):

The prospective acquirer typically offers a higher price per share than the corporation's stock price. This provides shareholders with a greater incentive to unload their shares. For example, if a stock's current price is $10/share, someone wishing to take over the company might issue a tender offer for $12/share on the condition that he can acquire at least 51% of the shares. 

Why it Matters:

Tender offers can be executed without the consent of the company's board of directors. The potential acquirer can work directly with shareholders to takeover the company. Sometimes this is referred to as a "hostile takeover."

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...