Thursday, July 3, 2008

Right Issue, Open offer, Tender Offer

Right Issue: Here a company would like to raise by issuing more shares in the secondary market. In right issue the company offers additional share to its already existing share holders. The subscription price is usually lower than the market price

http://www.stock-investment-made-easy.com/rights-issue.html

Open Offer: An open offer is similar to the rights issue. What happens in this case is that here a company offers it shares to the existing share holders at a discount. But these share holders cannot sell these shares in the secondary market. This is also known as the entitlement issue.

http://moneyterms.co.uk/open-offer/

Tender Offer: In tender offer, the company (say A) which wants to acquire another company (say B) offers the shareholders of B to buy their shares at a premium. This is done to increase the stake of B in A.

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