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~Tender~
STOCK TRADING STOCK TRADING STRATEGY & EDUCATION
Tender Offer
By ADAM HAYES
Updated April 15, 2022
Reviewed by GORDON SCOTT
Fact checked by TIMOTHY LI
NEWS ALERT April 15, 2022, 1:36 p.m. EDT: On April 13, Elon Musk offered to acquire all of Twitter's common stock at $54.20 a share in a hostile takeover bid that values the company at $43 billion.1 Twitter's board responded with a shareholder rights plan that would dilute Musk's stake if he acquires more than 15% of the company's common stock.2
What Is a Tender Offer?
A tender offer is a bid to purchase some or all of shareholders' stock in a corporation. Tender offers are typically made publicly and invite shareholders to sell their shares for a specified price and within a particular window of time. The price offered is usually at a premium to the market price and is often contingent upon a minimum or a maximum number of shares sold.
To tender is to invite bids for a project or accept a formal offer such as a takeover bid. An exchange offer is a specialized type of tender offer in which securities or other non-cash alternatives are offered in exchange for shares.
KEY TAKEAWAYS
A tender offer is a public solicitation to all shareholders requesting that they tender their stock for sale at a specific price during a certain time.
The tender offer typically is set at a higher price per share than the company’s current stock price, providing shareholders a greater incentive to sell their shares.
In the case of a takeover attempt, the tender may be conditional on the prospective buyer being able to obtain a certain amount of shares, such as a sufficient number of shares to constitute a controlling interest in the company.