A tender offer in which a third party seeks to acquire another company’s securities. The third party makes a solicitation (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.