1982 TENDER OFFER UPDATE

• Published date: 01 April 1983
• Date: 01 April 1983
• DOI: http://doi.org/10.1111/j.1540-6288.1983.tb01926.x
• Author: Douglas V. Austin

1982

TENDER OFFER UPDATE

Dr.

Douglas

V.

Austin, The University of Toledo

In

1982,

there were less tender offers than in

1981.

In fact,

1982

saw the

second lowest number of tender offers since

1976.

Cash tender offers remained

as popular in

1982

as before, and there was

no

material shift in the percentages

of exchange

or

combination tender offers seen in

1982.

Overall success rates

for uncontested tender offers were on a par with previous years while contested

tender offers saw a significant decrease in the success rate of such tender

offers as compared to the previous years.

average higher than in previous years, although a significant number of tender

offers had lower

bid

premiums than in

1981.

For example, in

1981

over

19

per

cent of all tender offers had a bid premium in excess of

100

per cent, while this

was only

2.5

per cent in

1982.

Since contested tender offers were slightly less

in

1982,

the tender offer outcomes as correlated to tender offer bid premium

size indicated a slightly less success rate than in-previous years and over the

historical average. Finally, tender offer financing continues to come chiefly

from bank credit and parent financing sources, while outside sources such as

shareholders' equity

or

long-term debt securities continue to be of only frag-

mentary importance.

On

average, the

1982

trends were not significantly different from those of

previous years.

On

the other hand, some certain new innovations such as the

two-tier tender offers represent different values for different percentages of

the stock, and different types of securities

or

cash being offered for different

portions of the stock, these two-tier tender offers have been a significant

financial force in

1982.

There is no reason to believe that such innovations

will not continue to take place in

1983

and beyond, as the corporate bidders

attempt to take advantage of new techniques and innovations in order to maintain

their degree of successfulness, while at the same time target corporations

attempt to keep themselves independent through increasingly complex defensive

techniques.

Tender offer bid premiums were on

It would not be surprising that

1983

would indicate a smaller number of tender

offers with less of the BendixIMartin MariettaIUnited Technology/Allied Corpora-

tion variety, due to the cost and uncertainty of such takeovers and their

doubtful success, at the same time still utilizing the tender offer vehicle for

corporate takeovers without consent in areas where such offers are

so

good

that

they will be uncontested.

The uncontested tender offer is still almost completely successful.

rare occasion on which it is not successful.

On

the other hand, the

of contested tender offer successes has been going down and there is

that such trend will be reversed in

1983.

In fact, the Congressiona

in two-tier tender offers and the entire tender offer mechanism may

decline in the tender offer success rate over the entire year.

It is a

percentage

no reason

interest

ead to a

90