Last week, Kerkorian came out with a tender offer to purchase up to 20M shares of F at $8.50. My question is, why not buy the shares in the open market, where they’re currently trading at approximately $8.10?
To give Ford more capital to attract more investors.
How does Kerkorian doing a tender offer, instead of buying in the open market, give Ford more capital?!?!?
probably cuz buying it on the open market is going to move the price up over that 8.50 level at some point, so this is probably a faster way to induce people to unload their shares and limit the highside that they would have to pay for the stock…opinion
It’s probably a move for a take over of sorts: From ye olde Wiki: "To induce the shareholders of the target company to sell, the acquirer’s offer price usually includes a premium over the current market price of the target company’s shares. For example, if a target corporation’s stock were trading at a value of $1/share, an acquirer might offer $1.15/share to its shareholders on the condition that 51% of shareholders agree. Cash or other securities may be offered to the target company’s shareholders as consideration, although a tender offer in which securities are offered as consideration is generally referred to as an “exchange offer.” "
Bloomberg also talks about how it is an infusion of capital and his (possible) motivations: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_2ZCjXXsNIo