Definition
Open Offer
An open offer is a mandatory offer to public shareholders to buy their shares when an acquirer crosses certain ownership thresholds in a company.
Under SEBI's Takeover Code, an acquirer who buys 25% or more of a company (or gains control) must make an open offer to buy at least 26% more from public shareholders, at a regulated minimum price. This gives minority investors an exit if control changes hands.
Open offers protect small shareholders from being trapped under a new controlling owner without a chance to sell. The offer price is set by a formula based on past traded prices and the acquisition price, ensuring fairness.
Related terms
- PromoterA promoter is the founder or controlling shareholder group that establishes and effectively controls a company.
- Merger / AmalgamationA merger or amalgamation is the combination of two or more companies into one entity, with shareholders of the merged firm receiving shares of the surviving company.
- DelistingDelisting is the removal of a company's shares from a stock exchange, after which they no longer trade publicly.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.