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Tender Offer
Definition
Tender Offers trigger specific rules in the United States and other countries with regard to the stock markets. A tender offer is an announcement to the broad market that a third party would like to purchase a substantial percentage of another firm's equity shares for a fixed price and over a certain period of time. They are usually conditional on the ability of the acquirer in the acquisition being able to get a fixed percentage of the outstanding shares. The price is almost always at a premium to the current market value of the shares.
Using the term Tender Offer :
The acquirer must file a 14D notice with the SEC that provides information about the identity of the purchaser. This is required when the percentage of equity owned will be over 5% of the outstanding shares. If it is less than 5%, disclosure is generally not required. These are known as mini-tenders.
Pay Special Attention To :
Tender Offers have significant implications around the insider trading rules. Ensure that you follow these rules carefully. Essentially, if you have knowledge of a forthcoming tender offer (pre-public announcement) you may not trade.
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Related terms
Investment Banking , Mergers , Acquisitions , Insider Trading
