What is a Tender Offer (Buy Back)?
A Tender occurs when a company wants to buy back their shares to regain more control over their business.
The price shareholders receive is known as the strike price. Usually, share holders have the opportunity to tender a set percentage of their holding, known as their basic entitlement. This is the set number of shares which the company will guarantee to buy back in the offer.
Holders may elect to tender less than their basic entitlement but also in excess up to their current position. Excess tenders are not guaranteed to be bought back by the company. This is dependant on the number of elections which they receive in the market as a whole.
Excess tenders maybe part satisfied depending on the number of holders who wish to tender their basic entitlement and if this is elected in full across the market. Often, excess elections are scaled back and tendered in part, as the company is unable to buy back all shares .
As you hold your shares in a nominee, the scale back rate maybe higher or lower than that announced in the market and as a result you may tender more or less shares than you would have done if you held in your own name.