First of all, a small warning, investing in shares has a high risk, even more so, when you do not have the appropriate knowledge, please do not invest money that you need at the end of the month or do it by simple recommendation or hearsay, study the company and all the variables before investing your money.
Well, now that we know what a tender offer is (if not, click here), let’s see what types of PTBs exist:
Tender offer according to the percentage to be purchased:
A tender offer can be total or partial. A total tender offer seeks to buy 100% of the shares, i.e. the buying company wants to integrate the bought company into its company.
There may also be the case of a partial tender offer, in which not 100% of the company is purchased but only a part, a percentage, normally to have a certain control over the purchased company.
The tender offer according to the attitude of the company to be bought:
A tender offer can be friendly, which is when it has the support of the board of directors of the company to be bought, i.e. the company itself wants to be bought and facilitates things so that it can be sold.
However, there is also the hostile tender offer, where the board of directors of the target company does not want the company to be sold and does not recommend its shareholders to do so (sell their shares); it is up to the acquiring company to seduce the shareholders to sell.
A hostile takeover bid can occur for many reasons, two of the most common are:
-The management board fears he will lose his job
-The financial offer according to the board of directors is not sufficient.
As hostile tender offer tend to be more complex, third parties may come in and bid higher than the initial offer price.
Voluntary and compulsory tender offers:
In the voluntary tender offer, the acquirer files a tender offer, although it could actually not do so and continue buying the shares in the market, like anyone else, it makes a tender offer because it is in its own interest, not because it is obliged to do so.
However, when someone buys a large percentage of a company (the percentage varies from country to country) they may be obliged to launch a However, when someone buys a large percentage of a company (the percentage varies from country to country) they may be obliged to launch a takeover bid so that all the company’s shareholders have the opportunity to sell at the same price, usually better than the market price. so that all the company’s shareholders have the opportunity to sell at the same price, usually better than the market price.
A tender offer can be a good opportunity for the shareholder, as he can sell his shares at a closed price above the market price normally, but it can happen that someone does not want to sell and keep his shares, if the tender offer is a delisting one (taking the company off the stock exchange) in this case the shareholder can keep shares that are no longer listed, which is a problem in my opinion.
In other cases, there is a squeeze-out which forces minority shareholders to sell so that no one will stay inside an unlisted company.