DEFINITION of 'Proration'

A situation during a corporate action in which the available cash or shares are not sufficient to satisfy the offers tendered by shareholders. Therefore, a proportion of both cash and shares is granted for each offer tendered.

BREAKING DOWN 'Proration'

When you tender an offer for a corporate action, the company making the bid will attempt to fulfill the tender as you requested. However, if the company does not have enough stock or cash, a mixture will be given in order to appease all stockholders.

RELATED TERMS
  1. Hedged Tender

    A strategy in a tender offer where an investor short sells a ...
  2. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
  3. Creeping Tender Offer

    A takeover strategy involving the gradual acquisition of the ...
  4. Tender

    To invite bids for a project, or to accept a formal offer such ...
  5. Schedule TO-C

    This schedule, filed with the SEC, is simply any written communication ...
  6. Legal Tender

    Any official medium of payment recognized by law that can be ...
Related Articles
  1. Small Business

    Explaining Tender Offers

    A tender offer is a broad public offer made by a person or company to purchase all or a portion of the shares of a publicly traded company.
  2. Investing

    How Does a Tender Work?

    Tender usually refers to the process in which governments invite suppliers to bid for the right to work on large projects.
  3. Managing Wealth

    3 Benefits of a Successful Tender Offer: Cliffs Natural (CLF)

    Learn about the potential benefits that the debt tender offer by Cliffs Natural Resources had for the company's balance sheet and income statement.
  4. Investing

    Should You Reject the Costco Mini-Tender Offer?

    Costco (NASDAQ: COST) shareholders might have gotten a surprise when they found out someone was offering to buy their stock. The warehouse club announced that TRC Capital was offering to buy ...
  5. Investing

    Stock Buyback/Repurchase

    A stock buyback, or repurchase, occurs when a company buys its own shares off the market and therefore reduces the amount of stock outstanding.
  6. Investing

    Explaining Rights Offering

    A rights offering is an offer by a company to its existing shareholders of the right to buy additional shares in proportion to the number they already own.
  7. Investing

    A Breakdown Of Stock Buybacks

    Find out what these company programs achieve and what it means for stockholders.
  8. Financial Advisor

    The Basics of The Series 79 Exam

    Passing the Series 79 exam is usually necessary for anyone who wants to work in investment banking.
  9. Investing

    Corning Reaches Into the Cloud for New Acquisition

    Corning (NYSE: GLW) is expanding its specialty glass empire. The company announced last week that it has reached an agreement to acquire Alliance Fiber Optic Products (NASDAQ: AFOP). The price ...
  10. Investing

    Cash: Can A Company Have Too Much?

    Cash is something companies love to have. But if they are not using it there could be problems.
RELATED FAQS
  1. What happens to the shares of stock purchased in a tender offer?

    Learn what a tender offer is, whether it is a good idea to accept a tender offer and what happens to the shares of stock ... Read Answer >>
  2. Why would it be in the interest of shareholders to accept a tender offer?

    Learn when it is in the best interests of shareholders to accept a tender offer. A tender offer is a bid to buy a large portion ... Read Answer >>
  3. How is a tender offer used by an individual, group or company seeking to purchase ...

    Learn how tender offers are used in takeover attempts, and understand the difference between a hostile takeover and a friendly ... Read Answer >>
  4. What usually happens to the price of a stock when a tender offer for shares of the ...

    Learn what happens to the price of a stock when a tender offer is made public. Some of the most contentious takeovers have ... Read Answer >>
  5. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Learn why it may often be in the best interest of a shareholder to accept a tender offer made at a premium to the market ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center