rationale behind tender offer?
Fund (the "Fund") is offering to purchase up to 30% of the net asset value, calculated prior to shares tendered pursuant to this tender offer (the "Net Asset Value"), of the Fund's shares of beneficial interest ("Shares") that are tendered by shareholders of the Fund ("Shareholders") and not withdrawn consistent with the terms of the Offer to Purchase and the Letter of Transmittal (which together with the Offer to Purchase constitutes the "Offer"). The Offer is being made to all Shareholders.
Can anyone please help me understand tender offer?
Is this a good/bad sign for the company?
In a tender offer you are trying to buy shares directly from the stockholders who can individually decide whether or not to sell to you. It's one of the fastest ways to gain control of a company, doesn't require any shareholder meetings or votes, requires less disclosure, and is effective in a hostile situation (e.g., management isn't too keen on you taking over). However, tender offers tend to be more expensive, you can't thoroughly research the company, and there's no contractual protection.
My question is, why would a company/fund try to gain control of the company fund? Is it a good/bad sign for the company?
I don't think a tender offer alone is enough to determine if it's a good or bad sign. Additionally, who is it supposed to be good/bad for? Shareholders? Management? The buyer? It would also be helpful to learn whether or not it's a hostile takeover attempt.
There's mixed results from studies looking at the abnormal returns associated with tender offers. http://www2.bayar.edu.tr/yonetimekonomi/dergi/pdf/C8S12001/SK.PDF
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