Shareholder Behavior during Tender Offers: What Do We Learn from Regular Publications and Why Do Shareholders Tender Early?

Under the German Securities Acquisition and Takeover Act, shareholders can tender their shares within an acceptance period of four to ten weeks and the bidder has to regularly publish the shares tendered during this period. It is argued that these publications on the holdings of the bidder increase the transparency of the tender offer process for shareholders, allowing them to update their expectations on the success of the offer. In this paper, we first describe the decision situation of shareholders in tender offers. Then we analyze the tendering behavior of shareholders over time and examine what shareholders can learn from these regular publications. Additionally, we derive and analyze reasons why shareholders might tender early. Based on 117 offers for 119 securities realized between 2002 and 2005, we find that a majority of shares is tendered late but that certain characteristics of the offer increase early tendering. We conclude that the regular publications on shares tendered can only partially increase transparency on the holdings of the bidder for the outstanding shareholders.