Online tender offers, in the corporate world can many a time seem like a way to get hold of the companies shares. When the majority of a companies shares is owned by various investors or a company, it no longer has a say in the running of the company and the majority shareholder takes over.

Tenders can be the gateway to a hostile take over, in the article below Alice Shown discusses whether a tenders allow outside business to enter into another company through other means. Use the navigation link to view various articles on online tenders on CBN's website as well as business related articles.


Can Online Tender Offers be Considered Hostile Takeovers?
Author: Alice Shown

You have a company and now you have another company wanting to take you over. A tender offer is posted and now there are companies bidding for you. This makes you the target company and makes the potential buyer an acquirer. Even if the company doesn’t want to be sold, it can be if the shareholders agree to sell their shares for the price that the highest bidder wants to buy them for. These bids are made on tender offers and each shareholder is usually contacted personally in some way. What’s something is how these tender offers can be posted online, making the bidding process somewhat of a hefty competition.

But are tender offers hostile?

Some view tender offers as the doorway to a hostile takeover by the bidders, but that is not always the case. There are many times in which a company needs to be sold in order to survive. Posting tender offers and having a winning bidder in the end has saved a lot of companies throughout the years. Although the company may not sport the same name, they usually do keep the same staff. When they keep the same staff, they are saving jobs.

And then there are those companies who really don’t want to be bought, but the fact is that the tender offer is placed, the bidders get in contact with the shareholders, the shareholders agree to a price, and they sell their part of the company. When they sell their ownership, there really isn’t much that the company can do about it. And when these acquirers are bidding on tender offers, it is hard for the shareholders to resist many of the offers that they get.

For example, a company may have shares that are worth $19.90 each. A tender offer is placed and the bids are $22.50 per share, $24.69 per share, and $29.90 per share. Well, it is obvious that the shareholders are going to jump for joy if they are offered $10 more per share. If someone owns $100 shares, then that is an extra $1000 in their pocket. This means tender offers are fantastic for shareholders. The target company is not happy, the losing bidders are not happy, but the shareholders and the purchasing company are.

Do they have to buy all shares?

The acquirer doesn’t have to buy all shares because there may be people who will not buy. But when there are tender offers placed and bidders willing to pay $10 more per share, they are going to get the majority. The majority is all it takes to acquire the company. Those who didn’t give up their shares are exactly what they were before…shareholders.

As for whether or not tender offers should be viewed as bad, it just depends on how you look at it. It also depends on what the circumstances are. Many times, tender offers are viewed as a blessing, especially when there are jobs at risk. In recent times, the economic situation has resulted in many tender offers. There have been disputes and there have been easy takeovers that have resulted in the saving of jobs.