Placing a Bid to Own a Public Company

A tender offer is a bid to purchase some or all the shares in a corporation. Most often these bids are a public invitation for shareholders to sell their positions to the bidding party, at a specified price, within a set timeframe. As an inducement, the price offered is generally higher than the current market price. The offer is most often reliant on a minimum number of shares tendered, for example, 51% of outstanding to allow control.

A common variation of this is an exchange offer. This is a non-cash type of tender offer in which securities or other non-cash alternatives are offered in exchange for shares. When one company acquires another, it often does a share exchange in an exchange offer tender.

A publicly-traded company may present a tender offer for its own publicly held shares to either take themselves private or to reduce shares in the public’s hands and increase those in the corporation’s treasury.

Tender offers to acquire a company without the Board of Directors’ approval can be considered a hostile takeover. Hostile takeover acquirers in the past have included hedge funds, private equity firms, management-led investor groups, SPACs, and more recently a wealthy entrepreneur (Elon Musk).

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