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governance

Hostile Tender Offer

"Reveals agency conflicts between board and owners"

A direct offer to shareholders to purchase their shares at a premium, bypassing the board of directors who have rejected takeover discussions.

How It Works

  1. 1

    Acquirer approaches target board with friendly merger proposal

  2. 2

    Board rejects offer (often to preserve management positions)

  3. 3

    Acquirer announces tender offer directly to shareholders

  4. 4

    Offer typically 25-50% premium to current market price

  5. 5

    If successful, acquirer gains majority control and replaces board

Key Mechanics

Tender offers must remain open for minimum 20 business days

Best-price rule requires equal treatment of all tendering shareholders

Pro-rata provisions if offer is oversubscribed

Minimum condition (usually 50.1%) required for close

Regulatory Context

Governed by the Williams Act (Section 14(d)). SEC filing required immediately upon announcement. Board must file response within 10 days.