Tender Offer
Definition
A tender offer is a public offer made directly to a company's shareholders to buy their shares at a specified price (usually at a premium), bypassing a negotiated one-step merger vote. In the US, tender offers are governed by the Williams Act and SEC rules: the offer must generally stay open at least 20 business days, and all tendering holders must receive the same (best) price.
Tender offers are used both in friendly two-step mergers (offer followed by a back-end squeeze-out merger — under Delaware's DGCL 251(h), no shareholder vote is needed if the buyer reaches the required threshold) and in hostile situations where the bidder goes over the head of a resistant board.
The main appeal is speed: a two-step tender structure can close faster than a one-step merger requiring a proxy statement and shareholder meeting. Defenses like a poison pill can effectively block a hostile tender offer, forcing the bidder to pair it with a proxy fight.
Why interviewers ask
Interviewers ask you to compare a one-step merger to a two-step tender offer, or how a hostile bidder actually acquires a company. Knowing that a tender offer goes directly to shareholders — and that pills neutralize it — shows real M&A process knowledge.
Related terms
Interviews don't test definitions — they test recall under pressure.
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