Loading the player...

What is 'Tender'

To tender is to invite bids for a project or 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 in response 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. Regarding tender offers related to takeover attempts, the conditions of the offer are clearly listed and include the purchase price, number of shares requested, and a deadline for a response.

Request for Tender

A request for tender (RFT) is a formal and structured invitation to suppliers to submit competitive bids to supply raw materials, products, or services.  Because this is a public and open process, laws were created to govern the process to ensure a fair competition among bidders.  For example, without laws, bribery and nepotism may flourish.  Tender services are available for potential bidders and include a wide range of tenders from private and public sources.  These services include crafting suitable bids, coordinating the process to ensure deadlines are met, and ensuring compliance with applicable laws.  In the private sector, requests for tenders are referred to as requests for proposals (RFP).  An RFT allows potential bidders to respond to the defined needs of the issuer.

Tender Offer

A tender offer is a public solicitation to all shareholders requesting that they tender their stock for sale at a specific price during a certain time. To entice shareholders to release a specific number of shares, the offer typically exceeds the current market value of the shares.  

Since the deal targets shareholders directly, it effectively removes upper management from the process unless those members of management are also substantial shareholders. If the company looking to take over already has a notable share of the target company, referred to as a foothold block, a minority of the remaining shareholders may be enough to allow the company making the offer to become the majority shareholder. However, if the requested shares are not released by the deadline, the deal is often considered void, effectively allowing shareholders to block the deal.

RELATED TERMS
  1. Schedule TO

    Schedule TO is a filing with the SEC that is required of a party ...
  2. Tender Panel

    A tender panel is a method of financing pursuant to the sale ...
  3. Blitzkrieg Tender Offer

    Blitzkrieg tender offer was a takeover offer intended to be so ...
  4. Money

    Money is an officially issued legal tender, typically currency ...
  5. Schedule TO-T

    Schedule TO-T must be filed with the SEC by any entity, other ...
  6. Best-Price Rule - Rule 14D-10

    Best-price rule (Rule 14D-10) is an SEC regulation that stipulates ...
Related Articles
  1. Investing

    Qualcomm’s Odds of Boosting NXP Bid Are Rising

    Qualcomm may need to pony up more than $110 a share if it wants to clinch the NXP Semiconductors deal.
  2. Investing

    What Qualcomm’s Earnings Mean for NXP Bid

    It is now crystal clear how badly Qualcomm needs its acquisition of NXP Semiconductors N.V. to close.
  3. Investing

    Wendy's and Burger King Double Down on Chicken

    The fast-food world wants you to eat chicken tenders or nuggets instead of wings or hamburgers.
  4. Investing

    Breaking Down Stock Buybacks

    Learn about stock buybacks and how they affect financial ratios and stock value.
  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

    Apple Twists Qualcomm's Arm

    Qualcomm cut its guidance on Friday after Apple changed up its royalty payment schedule.
  7. Investing

    Know your shareholder rights

    Common-stock owners have numerous privileges and should be vigilant in monitoring a company. Read on to learn what rights you have as a shareholder.
  8. Trading

    The U.S. Dollar's Unofficial Status as World Currency

    Dollarization describes when a foreign currency becomes legal tender. Discover how the U.S. dollar emerged as official currency in many foreign countries.
  9. Investing

    How To Create A Real Estate Bidding War

    There are still many areas in the United States that are attractive enough to buyers that you can start a good, old-fashioned bidding war on your property.
  10. Investing

    Explaining Dutch Auction

    A Dutch auction is a public offering auction.
RELATED FAQS
  1. What is the difference between fiat money and legal tender?

    Learn more about fiat currency and legal tender. Find out how these terms are used by economists to describe different types ... Read Answer >>
  2. A Hostile Takeover vs. Friendly Takeover

    Most takeovers are friendly, but hostile takeovers and activist campaigns have become more popular lately with the risk of ... Read Answer >>
  3. What do the bid and ask prices represent on a stock quote?

    The bid and ask prices are stock market terms representing the supply, or the shareholder, and demand, or investor, for a ... Read Answer >>
  4. How does privatization affect a company's shareholders?

    Shareholders of a public company can benefit if the company is taken private at a premium to where they own the shares. Read Answer >>
  5. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
Trading Center