Blitzkrieg Tender Offer

  

Just like going into battle during World War II, a blitzkrieg (German for lightning war) is a takeover offer that is so attractive to shareholders that the acquirer hopes they can bypass the board of directors to get approval.

So yeah...think: lightning fast. A blitzkrieg tender offer is available "For a Limited Time Only!!!" For example, if a target company’s current stock price is $10, a blitzkrieg tender offer might be for $15, hoping they can acquire at least 51% of the shares.

The Williams Act of 1968 defeated the blitzkrieg tactic by requiring the company wanting to take over to provide details in a Securities and Exchange Commission (SEC) filing. In the filing, they have to say where the cash to buy is coming from (i.e. probably shouldn't be from a bank heist), and plans for the company after the takeover. The acquiring company must also give at least 20 business days for the target company to respond to the offer.

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stock was trading yesterday while a rival set of shareholders want more like

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20 bucks a share to sell the iPod hearing aid company to just you know [Billboard for the iPod hearing aid company]

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sell and go away. Well the all holders rule came along as part of the 1934 Act

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if the SEC was establishing granular rules so that the legally [Two people in suits walking down a corridor]

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unsophisticated weren't turned into lunch when the hungry Wall Street wolves [A wolf appears and drags one of them away]

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that all holders of the same exact class of security. i.e. basic common stock have

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to be offered the same deal that is one offer can't be given to the people who [Good offer document is given to Company A]

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wanted to sell at just 17 dollars and 23 cents and then some other punitive deal [Bad deal given to Company B]

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like is offered to the others like you know.. if you don't take this by 4:00 p.m.

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next Thursday we'll teepee your homes and then offer at most 16 bucks a share [Angry looking guy in a suit]

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going down a dime a week until you say uncle, or aunt yeah well that's the all

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holders rule. All holders get the same deal.

Up Next

Finance: What is a tender offer?
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A tender offer occurs when the government, or a large corporation, "tenderly" asks for bids, and then investors, uh... do their bidding.

Finance: What is the Williams Act?
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The Williams Act is federal legislation enacted to make acquisitions and/or takeovers fair. Nothing to do with tennis...sorry about that, tennis fans.

Find other enlightening terms in Shmoop Finance Genius Bar(f)