A tender offer is a public offer made by one company to the shareholders of another, aiming to acquire a controlling interest in that company. This is usually done by purchasing a significant portion of the target company’s shares. The offering company will specify the number of shares it wants to buy, the price it’s willing to pay, and a deadline for shareholders to accept the offer.

Why Tender Offers?

• Acquisition: To gain control of another company
• Merger: To combine two companies into one
• Hostile Takeover: When a company attempts to take over another company against the wishes of its management

Key Steps in a Tender Offer:

1. Public Announcement of Intent: Due to the significant impact on the target company’s share price, any individual expressing the intent to acquire control of a company must make a public announcement. This ensures transparency and allows shareholders to make informed decisions.
2. Offer Period and Terms: The tender offer must be open for a minimum of 25 and a maximum of 45 business days. The offeror (the company making the offer) can modify the offer during this period but only to improve the terms for the shareholders.
3. Withdrawal Rights: Shareholders who have tendered their shares have the right to withdraw their acceptance within a specified period.
4. Offer Price: The offer price must be fair and equitable. It cannot be lower than the highest price paid by the offeror or related parties within the preceding 90 days.
5. Competing Offers: If a competing offer is made, the initial offeror may have the right to extend the offer period to match the competing offer.
6. Reporting Requirements: The offeror must report the results of the tender offer to the regulatory authorities.
7. Termination of the Offer: The offeror may terminate the offer under certain circumstances, such as if a material adverse change occurs in the target company or if the offer is unsuccessful.

Why is a Tender Offer Necessary? When a company acquires a controlling interest in another company, it can significantly alter the company’s direction and operations. A tender offer ensures that shareholders of the target company have the opportunity to decide whether to sell their shares and realize a gain or to retain their shares and participate in the new company.

A tender offer is a structured process designed to protect the rights of shareholders in a takeover situation. It provides shareholders with the opportunity to sell their shares at a premium and ensures that the acquiring company pays a fair price.

At FynnCorp, we offer comprehensive financial advisory services, including expertise in mergers and acquisitions. Our team can guide you through the complex process of making or responding to a tender offer.