Stock Exchange

Tender Offer

In stock market terms, a tender offer is a public offer to buy a company’s shares which is made by a person or entity to the company’s existing shareholders. The person or entity making a tender offer normally aims to gain control of the company. For that reason, a tender offer is only valid if enough shareholders are interested in accepting the offer and selling their shares.

The terms and conditions of the offer determine how long it is valid and the price at which the securities have to be sold. Normally, the price offered is notably higher than the share’s actual market value. By offering an above-market price, the person or entity making the tender offer aims to motivate shareholders to sell their shares.

Example: An investor owns 10 percent of a company. They want to gain a controlling stake in the company, for which they need to own at least 50 percent of its shares. The company has a total of 1 million shares, each of which have a value of 20 francs. The investor makes a tender offer to all of the company’s shareholders. They are willing to buy 400,001 shares for 25 francs each – 25 percent above the market value. In exchange for this premium, the investor seeks to gain the opportunity to buy enough shares in the company to give them a controlling stake of more than 50 percent.

The term tender in the term indicates that the prospective buyer is making an open offer to shareholders to buy their shares at a certain price. The takeover can only happen if enough shareholders agree to the sale. So a tender offer is an offer to buy shares, if their owners are willing to sell them.

Once a tender offer has been made, the stock’s price generally lingers at the price paid, or slightly under it. Often, the price of a company’s stock climbs when a tender offer is announced. If you only buy the company’s stock after the announcement has been made, you generally will not be able to profit much from the price hike because the offer has already been accounted for in the market price. The reason why the price often lingers just below the offered price is that there is no sure way to know whether or not the offer will be accepted. If a company’s stock does not climb or even loses value after a tender offer has been made, this indicates that the company’s shareholders do not expect the takeover to happen.

A tender offer can be made by one or multiple people, or by companies. A company can also make a tender offer for its own shares (as part of a share buyback program, for example). In this case, the company offers to buy its own shares from its shareholders at a certain price.

More on this topic:
Common stock market jargon explained
Compare Swiss online trading platforms now

Editor Raphael Knecht
Raphael Knecht was an analyst and a specialized editor at moneyland.ch until the end of February 2023. Since then, he is supporting the editorial team as a freelancer.
Online trading brokers in comparison

Find the cheapest online broker now

Compare now
Trading platforms

Brokers with low fees

Swiss Trading Platform

Swissquote

  • Leading Swiss online bank with FINMA license

  • Free multicurrency account & low commissions

  • Access to more than 3 million products (shares, ETFs, crypto and more)

Swiss Trading Platform

Cornèrtrader Special Offer

  • Special offer: particularly favorable conditions for Moneyland users

  • No custody account fees for shares

  • Swiss online bank with FINMA license

Swiss Broker

Saxo Bank Special Offer

  • Special offer: Reimbursement of brokerage fees up to CHF 200 for 90 days

  • Licensed Swiss bank (FINMA)

  • Free expert research and trading signals

Deal of the Day
×
Swiss Trading Platform

Swissquote

Leading Swiss online bank with FINMA license

Wealth managers in comparison

Find the most favorable wealth management now

Compare now for free
Request now without obligation

Swiss wealth managers

Digital Private Banking

Managed by Alpian

  • Unlimited access to wealth advisor

  • No additional bank account charges

  • Customized portfolios

Robo advisor

Bank CIC cleverinvest

  • Digital asset manager

  • Flat fee of 0.5%

  • Already from CHF 1000

Online wealth management

PostFinance E-Investment Management

  • Digital wealth management

  • From CHF 5000

  • Direct opening possible

Request now without obligation

Choice of digital asset managers

Robo Advisor

Findependent

  • Up to CHF 2000 free of charge

  • Low-cost ETF

  • Sustainable investments

Digital Private Banking

Managed by Alpian

  • Unlimited access to wealth advisor

  • No additional bank account charges

  • Customized portfolios

Digital asset management

Selma

  • Digital financial assistant

  • Free investment plan

  • Free test account

Robo advisor

True Wealth

  • Free test account

  • Flat fee: 0.5% - 0.25%

  • Inexpensive ETF

Robo advisor

Bank CIC cleverinvest

  • Digital asset manager

  • Flat fee of 0.5%

  • Already from CHF 1000

Request now without obligation

Choice of digital asset managers

Robo Advisor

Findependent

  • Up to CHF 2000 free of charge

  • Low-cost ETF

  • Sustainable investments

Digital Private Banking

Managed by Alpian

  • Unlimited access to wealth advisor

  • No additional bank account charges

  • Customized portfolios

Digital asset management

Selma

  • Digital financial assistant

  • Free investment plan

  • Free test account

Robo advisor

True Wealth

  • Free test account

  • Flat fee: 0.5% - 0.25%

  • Inexpensive ETF

Robo advisor

Bank CIC cleverinvest

  • Digital asset manager

  • Flat fee of 0.5%

  • Already from CHF 1000