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Tender Offer (Definition) | Process | Top 10 Types of Tender Offer - YouTube
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hello everyone hi welcome to the channel
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clicking the bell icon today we have a
topic with us is tender offer see tender
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offer is is all about a proposal of an
investor for something right you know
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what is the tender offer it is all about
the proposal by an investor to all the
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current shareholders of the publicly
traded firm basically to purchase you
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know off part of their shares for sale
at certain price and time so such offers
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can be executed without the permission
of the firms BOD that is for a director
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and acquirer can coordinate with the
shareholders for taking over the form so
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it can also be referred to as the
hostile takeover this is very scary word
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for every company and it's true when the
directors of the target company you know
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poses the acquirers gaining control over
the form so let's consider over here an
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example you try understand with an
example so that we have clear
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understanding the current stock price
let's say stock price of ABC Limited is
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let's say standing at $15 per share and
someone knows wishing to take over the
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firm a issues or tender offer at let's say
18 per share on the condition that you
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know they can acquire the minimum 51%
of the shares so now I'll take
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you to the top 10 types of for tender
offer
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see from a shareholders perspective such
offers are voluntarily for production as
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they can trade due to better offer
however a better it can be mandatory to
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make an offer so you know there are some
of the top 10 types I will try and
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discussed each one of them the first one
is the mandatory offer see mandatory is an
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offer which is in which the entity is
making the offer and he has to make it
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for the rest of the shares of the target
company so this is because majority
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stake holders could use the rights to
vote right to vote at the AGM to their
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own advantage at the expense of the
shareholders so thus if the entity is
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making the offer he has already reacted
or reached a certain stake in the target
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company and has gone over the certain
threshold it has to make an offer for
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the remaining of the shares the second
point of discussion is voluntary
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involuntary choose to make tender offer
there is no much discussion then there
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is a friendly tender offer now when an
offer is made for outstanding shares of
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the target company the board of
directors usually informed about the
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intentions so they can further advise
the shareholders on whether to accept or
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reject the offer so in case the board
recommends accepting the offer it is
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called as the friendly or tender then
there is called a hostile tender offer
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see if the person or entity making the
offer does not inform the board of the
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target company of the respective bit
over the board things that the offer
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price is too low and and person entity
making the offer continues to publish
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publicize the bid then the offer is
hostile the next one is gripping the
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tender offer now in most of the
countries the rules governing the
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takeover state on what percentage is
permitted and what is not
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so through through this tripping offer
investors or the group of individuals do
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you know of a strategy to take advantage
around these rules so this group of
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individual will gradually acquire the
target company shares in the open
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multimeter goal over here of such an
offer is to acquire sufficient shares
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okay and of the stock to have enough
interest in the company for creating
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voting block at the AGM of the target
company so it is see it's a tactic through
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which Dean you offer attempts
to circumvent the legal requirement and
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quietly purchase shares in the small
portion from various other of Shareholders
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so once a substantial number of shares
have been required with the group the
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process of the filing of the documents
with the SEC is undertaken resulting in
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the target companies finding themselves
in a hostile takeover or before getting
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in the chance to prepare things mix is
exclusionary okay it is exclusionary
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tender see this kind of offer is
generally prohibited as the bidders
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would offer to purchase the outstanding
shares from certain children while
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excluding the others then we have the
mini tender see this is an offer
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basically to purchase less than 5% of the company stock directly
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from the current investor so such offers
are not regulated by the security
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Exchange Act and no requirement is
mentioned in the disclosure such tenders
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offer no carry high risk since the
actual intentions of the entity making
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offer is not at all fear we have then
the partial tender offer see this is an
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offer to purchase some but not all the
shares of the company next is the self
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tender now it is an offer by the firm to
it shareholder us to buy some of all the
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shares which they will purchase it back
after some time so this is also referred
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as a buy back offer and can be attracted
to prevent the hostile takeover or to
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make it more and more difficult next set
that we have nexus to tire see initially
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in case of tire the acquiring company
will make a tender offer to obtaining
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voting control of the target company and
in the second stage okay first stage
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will be there will be a tender offer and
the voting control of the acquired
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company and in the second stage it will
be the rest of all the shares will be
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purchased right so this for all the ten
types that you should have understanding
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and our knowledge regarding how the
tender offer work then let's understand
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the process of the tender offer see the
bidding of the company shall form a
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strategy about the expansion through
acquiring the other companies expansion
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can either be what we call as organic
that is in our opening new branches or
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second is called inorganic that is
mergers and acquisition so many
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consultants may be involved in generating
getting strategies like management
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consultants financial consultants legal
and so on and so forth
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second the bidding form will request the
approval from the shareholders third
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process the third step is you know
necessary finances should be in place
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for potential future purchases which can
be through the issuance of for debt
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equity both goes in here okay and in
case of a showing extract body a company
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should call for a what we call as rights
issue fourth is an extensive list of the
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targets should we jot it down and the
most prominent target should be
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shortlisted fifth in case of the
friendly tender offer due diligence to
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avoid any unforeseen circumstances so
this could include examining the
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financial records of the target company
internal process control then you have
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budgets planning and analysis and
contracts its vendor supplier and
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stakeholders examining the insurance
policies right sixth you know the firm
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will state the offer price over here and
appoint the deal makers and of paying
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agents for executing the tender offer
their paying agents will prepare the
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prospectus or the offer document in
collaboration with the legal advisors
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they will also register with the
relevant regulatory authorities and
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ensure smooth the public announcement of
the offer now all the associated parties
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like broker dealers custodians will
communicate will communicate the
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information to the beneficial owner so
ninth process a ninth step is you know
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paying the agent paying the agent shall
collect the instruction from the
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shareholders and commit the success of
the office so they should also be
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officially published the results
additionally they are also responsible
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for collection of money and what we call
as it experiments so let me make my
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final conclusions on this tender offers
can be very fruitful for the investors
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businesses or group see
to acquire a majority in the company
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stock but if completed without the
knowledge of the Board of Directors such
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offers are generally viewed as a firm of
hostile takeover however it's very
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important for companies to pay attention
to the rules and regulation governing
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the tender offer now they can be
tremendously helpful giving the
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sufficient time for the firm but it'll
Manning if the offer is suitable or not
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for the business so a regulation also
helps the target business to reject the
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offer
you know if it's contradiction or it's
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contradicting the interest of the income
so that's it for this particular topic I
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