Tender

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DEFINITION of 'Tender'

To invite bids for a project, or to accept a formal offer such as a takeover bid. Tender usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. The term also refers to the process whereby shareholders submit their shares or securities to a takeover offer.

BREAKING DOWN 'Tender'

For projects or procurement, most institutions have a well-defined tender process, as well as processes to govern the opening, evaluation and final selection of the vendors. This ensures that the selection process is fair and transparent.

In the case of a takeover, most offers stipulate that a certain percentage of shares must be tendered by the deadline in order for the deal to proceed. Disgruntled shareholders who believe the takeover offer is too low often refuse to tender their shares; they may also try to marshal support from other shareholders against the takeover in a bid, to block the deal.

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