Secondary Market
When acquiring company ABC makes an offer to purchase shares directly from XYZ Corporation's shareholders without XYZ board approval, this is called:
Tender offer = direct offer to shareholders. Often used in hostile takeovers.
Complete Analysis & Legal Rationale
A tender offer is a public bid to purchase shares directly from shareholders, typically at a premium to the current market price. When made without target board approval, it is often part of a hostile takeover attempt.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
A merger typically involves board approval from both companies.
A leveraged buyout uses borrowed funds to acquire a company.
Matches the verified teaching point in the explanation.
A rights offering allows existing shareholders to buy new shares, not acquire the company.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.