don t confuse the term tender with a tender offer which most people often do the latter 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 in the u s tender offers are highly scrutinized and subject to extensive regulation 3
for example on dec 13 2021 dell dell announced it closed a tender offer to repurchase shares of the company s securities to fund the stock buyback the company used cash on hand along with the net proceeds from the sale of 2 25 billion of senior notes 4since the deal targets shareholders directly it effectively removes upper management from the process unless those members of management are also substantial shareholders if an acquiring company already has a notable share of the target company which is referred to as a foothold block a minority of the remaining shareholders may be enough to allow the offering company to become the majority shareholder if the requested shares are not released by the deadline the deal is often considered void if this happens it effectively allows shareholders to block the deal competitive tender vs non competitive tenderthe terms competitive tender and non competitive tender refer to two different methods governments use to sell government securities in the united states the government sells treasury securities such as bonds bills and notes to help fund the government s operations individual investors commercial banks corporations pension funds brokers and dealers are some of the typical buyers of government securities in exchange for investing in these securities buyers will receive the government s promise of full repayment at maturity along with a specified interest payment there are two ways that investors can purchase government securities through a competitive tender and a non competitive tender a competitive tender is a bidding process in which large institutional investors buy newly issued government securities these institutional investors compete with one another to purchase the securities in an auction the investor that bids the highest will win the auction and can purchase the security at the bid price smaller non institutional investors purchase government securities through a non competitive tender process the price for these securities is set by the large institutional investors during the competitive tender for example when the u s treasury auctions securities to large institutional investors it will use the winning bid to establish the fair market value fmv for its securities it will then use this value to set the price that smaller investors will pay during the non competitive tender the u s treasury issues bonds in a term of 20 years or 30 years and pays a fixed interest rate every six months until they mature 5examples of tenderin the u s many business owners look to expand their businesses by becoming government contractors with federal state or local governments they sell services or goods to governments and a variety of agencies federal agencies that routinely buy from contractors include the defense contract management agency department of energy department of education department of health and human services and department of homeland security 6becoming a contractor requires businesses to compete with one another by presenting proposals and quotes based on the requirements outlined by the government or agency in their invitation to tender this process is also referred to as a call for bids the u s federal government lists contract opportunities in a searchable database that helps business owners match open opportunities with the products or services they offer the database also lists pre solicitation notices solicitation notices and award notices 7