Fixed-price tender offer

Fixed-price tender offer

A one-time offer by an acquirer company to purchase a stated number of shares of a target company at a stated fixed price, usually at a premium over the current market price.
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c) Re-purchase option via a fixed-price tender offer at an all-in price
Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, announced today that its Board of Directors has authorized a self tender offer to purchase up to 2,620,690 common shares, or approximately 6% of its outstanding common shares as of May 31, 2005, through a fixed-price tender offer at a price of $14.
Firms can repurchase shares through an open-market repurchase, targeted share repurchase, fixed-price tender offer, or Dutch auction tender offer.
To overcome these difficulties, we examine repurchases using the Dutch auction (DA) and fixed-price tender offer (FPTO) formats.
Distribution of Dutch Auction and Fixed-Price Tender Offer Samples by Year, 1993-2004 Our sample consists of firms that repurchase shares with a Dutch auction (n = 130) or a fixed-price tender offer (n = 35) during our study period.
Nasdaq: DTAS) announced today that its Board of Directors has authorized a self-tender offer to purchase up to 6,426,735 common shares, or approximately 10% of its outstanding common shares as of January 31, 2003, through a fixed-price tender offer.
In this case, however, they might be more likely to use an open market repurchase than a fixed-price tender offer.
Studying fixed-price tender offers may be informative because these offers are typically much larger than open market transactions.
Thus in a fixed-price tender offer, firms may offer too much which hurts the remaining shareholders, or it may offer too little which results in an undersubscribed tender offer.
Historically, a greater proportion of shares has been sought in fixed-price tender offers than Dutch auctions.
Since the low bid premiums in Dutch auctions are generally lower than the bid premiums in fixed-price tender offers, Comment and Jarrell (1991) suggest fixed-price tender offers are stronger signals of firm undervaluation.
Section II describes the sample of Dutch auction and fixed-price tender offers, their stated purposes, and tendering firm characteristics.
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