Legal Definitions - cash tender offer

A cash tender offer is a type of takeover bid where a company offers to buy a minimum number of shares directly from the shareholders at a fixed price, usually at a premium over the market price. The purpose of this offer is to gain control of the corporation.

Company A wants to acquire Company B. Company A offers to buy 51% of Company B's shares at $50 per share, which is higher than the current market price of $40 per share. This is a cash tender offer because Company A is offering to pay cash for the shares instead of offering other corporate shares in exchange.

This offer is attractive to Company B's shareholders because they can sell their shares at a higher price than the current market value. If enough shareholders accept the offer, Company A will gain control of Company B.

Another example of a cash tender offer is when a company wants to take over a competitor. The company may offer a premium price for the competitor's shares to gain control of the market.