What Is a Tender Offer and What Are Its Advantages?
A tender offer generally takes the form of a publicized bid to purchase shares of stock at a premium over market price that is made directly to the target company’s shareholders by a bidder. The consideration offered in a tender offer may take the form of either securities or cash (tender offers involving stock or debt securities as consideration are referred to as “exchange offers”). An acquisition of a public company that is structured as a tender offer can provide several advantages over an acquisition structured as a statutory merger. A tender offer allows a buyer to purchase a controlling interest in the target company in a relatively short period of time (a tender offer must be held open for a minimum of twenty business days), thereby reducing the chance of a competitive bid for the target company. Tendering security holders benefit because they obtain the tender offer consideration more quickly than they would in a statutory merger. Best-Price Rule Created Uncertainty What Is th
