Company ABC is in the middle of a tender offer to purchase a small competitor, at a ratio of 3 shares of ABC stock for each share of the target company. In four days, the tender will expire, and the number of shares tendered remains below the squeeze-out threshold. What options are available to the company to ensure the tender is fully subscribed

Respuesta :

The option available to the company to ensure the tender is fully subscribed is to extend the tender and offer a 3.5x multiple to all investors (all holders' best price).

A tender offer is an open invitation to all shareholders to tender their shares for sale at a set price and during a certain window of time.

In order to give shareholders a stronger incentive to sell their shares, the tender offer is often established at a price per share that is higher than the company's existing stock price.

When a takeover attempt is made, the tender can be subject to the potential buyer being able to acquire a specific number of shares, such as those needed to form a majority stake in the business.

Hence, extending the tender and offer a 3.5x multiple to all investors (all holders' best price) is the option available to the company.

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