Question

Describe the different mechanisms available to a firm for repurchasing shares

Answer 1

If not enough shares are tendered, the deal can be cancelled. C.3.In a tender offer, the firm announces the intention to repurchase a fixed number of shares for a fixed price, conditional on shareholders agreeing to tender their shares.

Answer 2

Answer:

There are three mechanisms. 1) In an open-market repurchase, the firm repurchases the shares in the openmarket. This is the most common mechanism in the United States. 2) In a tender offer the firm announcesthe intention to all shareholders to repurchase a fixed number of shares for a fixed price, conditional onshareholders agreeing to tender their shares. If not enough shares are tendered, the deal can be cancelled. 3)A targeted repurchase is similar to a tender offer except it is not open to all shareholders; only specificshareholder can tender their shares in a targeted repurchase.