Understanding Tender-offer

Published on: Jan 18, 2022 8:03:49 AM

What is a tender offer?

A tender offer is a corporate action whereby investors are allowed to sell their shares to the offeror at a prescribed price for a specific period. Reasons behind tender offers may differ; these can include, but are not limited to the below:

Company share buybacks

When a company intends to buy back its own shares, it can place an offer for shareholders to sell their shares at a specific price.

Takeover

To gain control over a company, an offer can be brought to the table by the offeror to acquire at least more than the majority (+50% shareholding) of its holding; this offer can be presented by another company, hedge funds or any other private or public company.

Companies are more likely to undergo takeovers when trading at a low value.

A tender offer can come at different prices, especially looking at the company's performance; this offer is not always mandatory, and investors are not forced to sell their shares at the specific share price.

Read more on what happens when a company delists here
Delisting

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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