What happens to my shares if i decline a tender offer ?

Question

What happens to my shares if i decline a tender offer ?

Answer 1

They are sold to someone else.

Answer 2

The first answer is wrong.  If you decline a tender offer, you will still own your shares; however,  if the firm making the tender offer acquires sufficient shares, then it may propose a merger with the company and have enough votes to approve the merger.  The voting percentage required to approve a merger varies from state to state with some requiring only 51% and some requiring 67% (two-thirds).  If the acquiring firm receives over 90% of the outstanding shares of the company, then many states permit a short-form merger which means they don't have to have a shareholder vote.  In many cases, SEC rules and state corporate merger law prevents you from getting less money at the backend than what you could have received in the tender offer, but I would have to check that to be sure.  And, of course, not all tender offers are for the purposes of acquiring total control of the company.  Sometimes an investor finds it easier to acquire a large position at one time instead of trying to buy it little by little in the open market.  Similarly, some companies sponsor tender offers to reduce the total amount of shares outstanding in something called a dutch tender offer where the offerees help determine the price that the company will pay for the shares.