What is typically true about a tender offer?

A tender offer is typically characterized by the fact that it is made at a premium to the current market price of the shares being offered. This premium incentivizes shareholders to sell their shares, as it provides them with a financial benefit over the current trading price. The aim of offering a premium is to attract enough shareholders to sell their shares, particularly when a buyer seeks to gain control of a company or significantly increase their ownership stake.

The attractiveness of the premium in a tender offer is integral to its strategy, as it differentiates the offer from regular market transactions, thereby increasing the likelihood of shareholder participation. Shareholders are more inclined to accept the tender offer when they see it as providing immediate value above the market rate.