What is a creeping tender offer?

A creeping tender offer is the gradual accumulation of the shares of a company, with the intention of acquiring control over the company or obtaining a significant voting bloc within the company. This process is conducted through the acquisition of shares on the open market, rather than through a formal tender offer.

By using the creeping tender offer method, an acquirer can obtain at least a portion of the shares it needs to exercise control at market prices, rather than at the more inflated rates that it would likely pay in the event of a tender offer. However, this approach also means that failure of the acquisition bid will leave the acquirer with a large block of stock that it will presumably have to liquidate at some point in the future, possibly at a loss.

The creeping tender offer approach can be used to avoid the formal tender offer reporting requirements imposed by the SEC under the Williams Act. Tender offer reporting is required when an acquirer is soliciting for the shares of a business at a premium, with the offer being contingent upon the tendering of a certain number of shares.

Related Topics

Acquisition analysis 
Acquisition payment methods 
The control premium
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