An active act of solicitation that is made by a market player (an entity from the same sector or a third party, usually known as a bidder or offeror) to purchase a major part of a company’s securities. Solicitation is typically conducted by means of a tender offer to acquire common stock in a company or its debts (e.g., bonds issued by the company). A tender offer (known as an issuer tender offer) may also involve a case where a company attempts to acquire its own securities.

By making a direct solicitation to a target company’s stockholders to buy their holdings, a bidder can gain a controlling interest in the target company if the stockholders with a majority of its outstanding shares consent to sell their holdings, irrespective of how the target company’s board perceives the acquisition attempt.

A tender offer, only available for a limited period of time, is separately made to each current security holder. Its terms, such as the price offered to purchase securities, are predetermined. The purchase price involves a premium to the current market price of the securities, aiming to entice security holders to sell their holdings.

In certain cases, a tender offer is subject to  security holders tendering a minimum number or value of the solicited securities. For instance, if an offeror is stipulating a minimum tender of one million shares of a target company’s common stock, the tender will not be active if only 800,000 shares are tendered.

A tender offer in which a third party seeks to acquire another company’s securities is termed a “third party tender offer“.