Tender offer
TEN-der OF-fer
/ˈtɛndər ˈɒfər/
A public offer by a company to buy shares from its shareholders, usually at a premium over the market price, often used in hostile takeovers.
It's a direct appeal to shareholders, bypassing the target company's management and board. It's a powerful tool in takeovers, especially hostile ones.
The story behind the word. The term 'tender offer' combines two words with distinct histories. 'Tender' here comes from the Old French 'tendre,' meaning 'to hold out, offer.' 'Offer' itself is from the Latin 'offerere,' meaning 'to present, show, bring before.' So, a 'tender offer' is literally an act of 'holding out' or 'presenting' an offer, specifically to shareholders, often with a sense of urgency or directness.
Word relationships
- Bid: A general offer to buy; 'tender offer' is a specific, public, and often aggressive type of bid for shares.
- Offer to purchase: More general; 'tender offer' is a regulated term for a public offer to shareholders.
- Share repurchase: When a company buys back its own shares, rather than another company buying them.
Commonly confused with
- Merger agreement: A merger agreement is a negotiated deal between two companies' boards. A tender offer bypasses the board and goes directly to shareholders.
Collocations
- launch a tender offer
- successful tender offer
- cash tender offer
- hostile tender offer
Example sentences
- "In a bold move, the acquiring firm launched a tender offer directly to the target company's shareholders, hoping to gain a controlling stake despite board opposition." Reporting on a corporate battle.
- "A tender offer is often accompanied by a proxy fight, where the bidder tries to convince shareholders to vote out the current management." Explaining M&A tactics.
Memory hook
A 'TENDER' offer is a direct 'OFFER' to shareholders, often with a 'tender' (gentle, but firm) persuasion. TENDER = OFFER.
When not to use
Do not use 'tender offer' for a private negotiation to buy shares from a few individuals; it specifically refers to a public offer to all shareholders.
Fun facts
- The Securities and Exchange Commission (SEC) in the U.S. has strict rules governing tender offers to protect shareholders.
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