Tender Offer
A public offer to purchase some or all of shareholders' shares at a specified price, usually above the current market price.
What is Tender Offer?
A tender offer is a public bid by an acquirer to purchase shares directly from existing shareholders of a target company at a specified price, typically offered at a premium to the current market price to incentivize acceptance. Tender offers can be friendly (endorsed by the target's board) or hostile (made over the board's objection). The offeror sets a minimum acceptance threshold and a deadline for shareholders to tender their shares. Under SEC regulations, tender offers must remain open for at least 20 business days and comply with Regulation 14D disclosure rules. Tender offers are faster than negotiated mergers and allow the acquirer to bypass the target's board by going directly to shareholders.
Example
Elon Musk's 2022 acquisition of Twitter began with a hostile tender offer at $54.20 per share, a premium of about 38% above Twitter's stock price. Musk initially filed a 13D disclosure after accumulating a 9.1% stake, then made the tender offer directly to shareholders. After initially attempting to withdraw, he ultimately completed the acquisition at the original price, taking Twitter private for approximately $44 billion.
Source: SEC — Regulation 14D and 14E