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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To examine whether HT also provides higher market-timing profit in the stock repurchase market, Lo (2017) uses fixed-price tender offer sample in the study and finds that it is LT firms that are more successful at timing fixed-price tender offer stock repurchases.
In fact, mergers and acquisitions is a more complex area to study than SEOs and fixed-price tender offers, since in the SEO and the fixed-price tender offer markets, the managers are dealing with less sophisticated external investors.
Market-Timing Ability of Low Transparency through Fixed-Price Tender Offer Stock Repurchase.
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.
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.
Section II describes the sample of Dutch auction and fixed-price tender offers, their stated purposes, and tendering firm characteristics.
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.
During the 1980s, Dutch auctions became a popular alternative to fixed-price tender offers as a means of self-tendering shares of common stock.
Historically, a greater proportion of shares has been sought in fixed-price tender offers than Dutch auctions.
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