Definition of Tender Offer



A tender offer is an offer made by an investor who wants to purchase stocks from existing shareholders of a public listed entity. To make the offer attractive the price offered in the tender offer is slightly higher than the current market price of the share.

 


Another reason for adding a premium to the current share price is that a large number of shareholders, irrespective of the number of shares they hold in a company can benefit from this offer. The tender offer is normally used to take over a company’s control by acquiring shares from many small investors.


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