Tender offers have become rare in recent years. But after some arcane rules were clarified, it seems that such offers are making a comeback of sorts. The AP notes that through May, about 15 percent of friendly deals involved tender offers, up more than three times from a year earlier. Is this a good way of making hedge funds and others shut up about a supposedly "undervalued" price by a bidder? Maybe so. Tender offers usually offer speed. One can buy a firm much more quickly than it could if it went via the shareholder approval route. But the tender also puts pressure on shareholders to tender quickly, to avoid missing out on the offer, and locking in gains. That's preferable to to the long arduous route of holding out. Two recent deals, for Laureate Education and Biomet, seem to indicate that tenders can reduce shareholder opposition to deals.
Our take on this news: Nothing will shut up hedge fund managers.
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