Tender Offer

A tender offer is a public offer to all shareholders of a listed company to sell their shares at a set price. The bidder approaches shareholders directly and specifies the terms on which it will acquire their shares. Each shareholder decides whether to accept. An agreement with management alone is therefore insufficient. What matters is how many shares are actually tendered to the bidder.

In a voluntary takeover offer, the bidder can set a minimum acceptance threshold. This specifies the minimum holding it wants to obtain for the acquisition to proceed. Regulatory clearances may also remain outstanding. Transaction planning therefore centres on three questions: is financing secured, will the intended holding be achieved, and when can the offer be settled? The offer document explains the price, conditions and financing.

For shareholders, the offer price is central. A premium over the market price before the offer became known can provide an incentive to accept. By itself, however, it does not establish whether the company is fairly valued. The management and supervisory boards publish their assessment of the offer, explaining their views on the price and the bidder's plans.

In Germany, the distinction between a voluntary takeover offer and a mandatory offer is material. A person acquiring at least 30 percent of voting rights without a prior takeover offer must generally also make an offer to the remaining shareholders. Statutory minimum prices apply to both types of offer. A tender offer also does not automatically give the buyer ownership of all shares or remove the company from the stock exchange. Further steps may be needed for either outcome.

Note: This explanation is for general information only and does not constitute legal advice. The legal position depends on the individual case and may change with new legislation or case law. For a binding assessment, please consult a qualified lawyer.