Why do companies who want to acquire a target company, go for tender offer & want to pay a premium to the existing shareholder, when they can just buy the required quantity without premium FROM the open market?

Question

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In: Economics

Answer 1

If a company makes a tender offer to buy out a target company and the target company responds positively, it can lead to the target company opening its books to the potential buyer in the process of working out a deal, so they can see what they are actually buying. That option does not exist if they just try to buy the company off the open market (a hostile takeover).