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Tender Issue

A tender issue refers to the issuance of a formal offer by a company to purchase a specified number of shares or bonds from investors at a particular price, typically at a premium over the current market value. It is often part of a strategy for mergers, acquisitions, or corporate restructuring. The goal is to acquire enough shares to gain control or retire part of the company's debt.

Example

A corporation issues a tender to buy back a portion of its bonds from investors at a premium price, aiming to reduce its outstanding debt and lower interest expenses.

Key points

• A formal offer to purchase shares or bonds at a specific price, often above market value.

• Typically used in mergers, acquisitions, or corporate restructuring.

• Aims to gain control of a company or reduce outstanding debt.

Quick Answers to Curious Questions

A company might issue a tender to reduce outstanding debt, consolidate control, or restructure its financial obligations.

A tender issue offers shareholders or bondholders a set price, typically above market value, while an open-market buyback happens at current market prices.

If insufficient investors accept the offer, the company may not reach its desired control or debt reduction goals, or it may raise the tender price to encourage participation.