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Tender Offers

A tender offer is a public offer designed to convince the target's shareholders to sell their shares to the acquirer at a predetermined price and within a given time frame, subject to various conditions specified in the offer. The offer achieves its goals if the shareholders who accept it represent a sufficiently high ownership percentage to grant the acquirer control of the target. Effective control does not always require a 50% holding. On the other hand, in order to be able to coerce the minority into selling its shares in order to gain full control, it is necessary to hold 90% of the shares after the tender offer. Consummating a tender offer, as opposed to consummating a merger, does not entail the abolition of the legal existence of the company whose shares are being sold.

A tender offer is distinguishable from a merger and an acquisition of assets in that it does not require the approval of the target's organs; it is not based on negotiations between the managements of the two companies. That is, a tender offer can therefore be hostile to the interests of the target's management. On the other hand, the management's opposition to the tender offer can compromise the success of the acquisition of control.


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