Tender offer
M&A / Merger ModelAn offer made directly to shareholders to buy their shares, which they accept individually.
Also written: takeover offer, contractual offer
The bidder publishes an offer and each shareholder decides whether to accept. It does not require the target board's cooperation, which is what makes it the structure available for a hostile approach.
Its limitation is that acceptance is individual, so the bidder ends up with whatever proportion accepts. Reaching 90% unlocks the statutory squeeze out of the remainder; falling short can leave a minority in place indefinitely.
The alternative in the UK is a scheme of arrangement, a court approved procedure binding every shareholder once approved by the requisite majority. A scheme delivers 100% cleanly but needs the board to convene it, so it is only available on a recommended deal.
Bidders often set an acceptance condition above 50%, so they are not left holding a minority stake that gives no control and no route to the target's cash flows.