Tender Offer Law and Legal Definition

A tender offer is a widespread solicitation by a company or a third party to purchase a large percentage of a company’s shares or units for a limited period of time. The offer is at a fixed price, usually for more than the current market price, and is conditioned on shareholders tendering a fixed number of their shares or units.

Under the Securities Exchange Act of 1934, parties who will own more than five percent of a class of the company’s securities after making a tender offer for securities registered under the Exchange Act must file a Schedule TO with the SEC. The SEC also requires any person acquiring more than five percent of a company’s securities directly or by tender offer to file a Schedule 13D. Except for the anti-fraud and a few other provisions of Regulation 14E, the SEC’s tender offer rules generally do not apply to tender offers that result in ownership of less than five percent of a company's shares.