What is a tender offer? A) a request that a shareholder vote for a co

QUESTION

What is a tender offer?

A) a request that a shareholder vote for a corporate raider’s handpicked candidates for a company’s board of directors in hopes of taking over the company
B) an offer to buy stock from shareholders at a price that exceeds the present market price in hopes of taking over the company
C) a technique of finding a buyer for a company that is more acceptable to management than the buyer currently interested in the company
D) an effort to take on more debt to make a company look less attractive to an unwanted buyer currently interested in the company
E) an effort to borrow money against assets such as houses or pension funds to purchase a firm from its current owners

ANSWER

Answer: B
Explanation: B) Making a tender offer is one way to launch a hostile takeover. It happens when an outsider seeking to take over a company directly contacts the company’s shareholders and offers to buy their stock at a price that exceeds the present market price. The raider hopes to get enough shareholders to sell that he or she can gain control of the company.