Tender Offer Definition & Meaning | Financial Term | CSIMarket
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Glossary

Tender Offer

Financial Term

A tender offer is a type of public takeover bid, where an investor or an organization offers to purchase a significant number of shares in a company at a price higher than the current market price. Typically, the price offered in a tender offer is much higher than the market price, which can create interest among the shareholders to sell their shares.

Tender offers are commonly used in the financial industry to acquire control of a target company. A tender offer can be made by an individual investor, a group of investors, or another company that seeks to acquire a controlling interest in a target company. The tender offer can be seen as a way to bypass the board of directors of the target company, as it allows shareholders to make independent decisions about selling their shares.

Tender offers can be friendly or hostile. A friendly tender offer is when the target company is supportive of the offer, while a hostile tender offer is made without the approval of the target company*s board of directors. Typically, hostile tender offers are made when the bidder feels that the target company*s management is resisting their takeover proposal.

The process of a tender offer typically starts with the bidder announcing their intention to acquire a certain number of shares in the target company. The offer is then sent to the shareholders, who have the option to accept the offer or reject it. If enough shares are tendered, the bidder can then purchase these shares at the offered price, which gives them control of the company.

Overall, a tender offer is a method used in the financial industry to acquire a controlling interest in a target company. While it can be a friendly or hostile action, it allows shareholders to make independent decisions about selling their shares at the offered price.


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