What is a tender offer?

In a tender offer, the buyer offers to buy shares straight from the holders, for a set time. A company can also make one for its own shares, as a buyback. This page covers cash takeover offers, which usually name one price a share.

Say Woodgrove agrees to buy Litware for $50.00 a share in cash. Litware traded at $38.00 before the deal, and at $48.00 now.

Woodgrove offers $50.00 for every Litware share. Each holder chooses whether to accept, which is called tendering the shares.

If enough shares are tendered and the other conditions are met or waived, Woodgrove buys them. A merger then usually takes the shares that weren't tendered, at the same price.

Here the offer follows a merger agreement with the target. A bidder can also make one without the board's agreement, often called a hostile offer. Either way, the target must usually tell holders its position within 10 business days.

A tender offer can close sooner than a merger vote. Usually there's no proxy statement to send and no holder meeting to hold.

The offer must usually stay open at least 20 business days, which leave out weekends and federal holidays.

Under an SEC order of April 16, 2026, some offers can stay open for just 10 business days. In a takeover, the offer must be agreed with the target, all in cash at a fixed price, and for all the shares.

An offer covered by the SEC's going-private rule, Rule 13e-3, doesn't qualify. If a rival tender offer is announced later, the first offer must stay open at least 20 business days from its start.

In such an offer, the target must give its position by the next business day.

The time saved matters most when nothing else holds the deal up. If approvals take months, buyers often extend the offer until they're in.

In an agreed deal, the usual order is:

1. 1

   The offer starts

   The buyer files its tender offer with the SEC and sends holders an Offer to Purchase. It gives the price, the conditions and the end date.

2. 2

   The target responds

   The target files its own statement, saying whether its board recommends tendering, and why.

3. 3

   Holders decide

   While the offer is open, holders can tender. Under Rule 14d-7, they can also usually withdraw tendered shares until it ends, extensions included.

4. 4

   The offer ends

   If the minimum tender is met and the other conditions are met or waived, the buyer accepts the tendered shares. It must pay for them promptly.

5. 5

   The merger follows

   The shares not tendered usually convert into the same cash. For a Delaware company, Section 251(h) can let the merger close without a holder vote.

If a condition isn't met when the offer is due to end, the buyer often extends it. Each extension moves the tender offer expiry.

Gilead agreed to buy CymaBay on February 11, 2024, for $32.50 a share in cash. It used a tender offer.

The offer started on February 23, 2024, and ended on March 21, 2024, without an extension.

Enough shares were tendered. Gilead accepted them on March 22, 2024, and the merger closed the same day, under Section 251(h), without a holder vote.

From signing to closing took 40 days.

Each holder chooses whether to tender. Holders who tender are paid promptly after the buyer accepts their shares, once the offer ends.

Every share bought in the offer gets the same price. Under Rule 14d-10, each holder whose shares are bought must get the highest price paid to any other holder in the offer.

That covers a raise too. Under Section 14(d)(7) of the Exchange Act, holders whose shares the buyer buys get the higher price, even if they tendered before the raise.

Holders who don't tender are usually paid the same cash later, in the merger, if it closes.

Shares sold in the offer can't seek appraisal. Shares not tendered may still qualify in the merger.

The Structure column shows the Tender offer tag. The checklist's Structure line reads Tender offer, and the deal page's top line reads Cash, tender offer.

Holders approve by tendering. Meeting the minimum tender usually removes the need for a separate merger vote.