Tender Offer

А public offer to buy and/or exchange voting shares, issued by a public company, whose shares are subject of a tender offer.

What is it?

Tender offering is a public offer to buy and/or exchange voting shares, issued by a public company, whose shares are subject of a tender offer, carried out under the conditions and procedure of the Public Offering of Securities Act of the Financial Supervision Commission and other relevant legal framework in this respect. The tender offer is an invitation to all the shareholders in a public company to sell their shares to the offeror at a share price approved by the Financial Supervision Commission (FSC) prior to the tender offer as the price of the tender offer shall be equal for all shareholders. The tender offering shall be run via an investment intermediary.

Types of Tender Offers

The tender offers are two types: mandatory and voluntary.

  • The mandatory tender offer shall be made when certain thresholds are reached;
  • The voluntary tender offer can be made by a shareholder holding at least 5% of the voting shares, who would like to acquire larger share, or would like to delist the company

Tender offers are an integral part of M&A strategies involving listed companies with certain free float.

Advantages

  • The shareholders may consolidate their ownership at a predetermined price and under strict rules
  • Alternative instrument to acquire a larger stake in a target company, however the outcome in terms of achieved stake depends on the strategy and existing shareholding structure

Whom is it Suitable for?

  • Companies aiming to take over a company or shareholders aiming at acquire a larger stake in a company;
  • Shareholders targeting future delisting of a public company.

In both hypotheses the tender offeror shall hold at least 5% of the voting shares.

Frequently Asked Questions

Meeting regulatory requirements and/or a way to change the status of the company from public to private.

Depends on the stake owned and in any case this is a legal requirement.

When considering running a tender offer, the offerors should have in mind that this is a strict legal procedure with limited flexibility.

Funds necessary for the purchase of shares in a tender offer process shall be secured prior to commencing a tender offer.

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