What Happens When I Don't Tender My Shares?

Merging public companies often submit to numerous reviews before closing a deal.

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A number of publicly traded companies grow through mergers and acquisitions. These transactions involve the exchange of cash or stock for existing shares in the target company. Reasons for acquisitions can range from expanding a market footprint to broadening product or service offerings to gaining new distribution or sales channels. Because larger public companies can have millions of outstanding shares and hundreds of thousands of investors, companies need shareholders to turn in, or tender, their shares.

Tender Offer

A tender offer occurs when an acquiring company offers to buy another company, the target, at a specified price. The tender offer involves the purchase of the majority of a company's outstanding shares during a defined period of time. For the tender offer to be successful and shareholders to receive the price offered, investors must remit a specified percentage of outstanding shares.

Tendering Your Shares

When you tender your shares, you sign or e-sign documents provided by your brokerage firm in which you agree to remit, or turn over, all your shares. In the rare event that you actually have stock certificates in your possession, you must mail in the stock certificates to the designated address. In a cash purchase, once you remit your shares, you receive cash at the acquisition price per share. In a stock acquisition, you receive an agreed-upon number of shares in the acquiring company.

Transaction Completion

If you do not tender your shares, you will not receive any payment, in cash or stock, until the acquiring company fully completes the acquisition or merger. Once an acquiring company and its target work through the major legal and regulatory hurdles, they will announce a completion time frame. Once only minor issues remain, the companies will announce the completion date, which legally finalizes the deal. Depending on the complexity, this approval process could take several weeks to more than a year.

After Completion

Once the companies complete the acquisition, through your brokerage firm, you will receive cash for your shares at the tender offer price if the deal was a cash transaction. The same will occur for a stock transaction except that you will receive the applicable number of the acquiring company's shares instead. If you mailed in your stock certificates, you will receive a check or stock certificates by mail.


If you did not tender your shares and the merger or acquisition fell through, you will simply retain the shares you owned before the tender offer was made. Although institutional investors make up the bulk of investors in a publicly held corporation, some takeovers may be hostile, meaning the board did not approve the acquisition. With hostile transactions, some companies have special provisions that require as much as 80 percent of shares to be tendered for the deal to close. In this scenario, if you are in favor of the deal, you must tender your shares. To not do so is to increase the risk of the deal not closing.

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About the Author

Tiffany C. Wright has been writing since 2007. She is a business owner, interim CEO and author of "Solving the Capital Equation: Financing Solutions for Small Businesses." Wright has helped companies obtain more than $31 million in financing. She holds a master's degree in finance and entrepreneurial management from the Wharton School of the University of Pennsylvania.

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