What Is an Odd-Lot Tender Offer?

A tender offer is an offer made by a publicly traded corporation to shareholders to purchase their shares at a specified price during a certain period. The offer is usually made when the corporation faces a possible merger or takeover attempt. Odd-lot tender offers occur when an offer is made to a shareholder who holds less than the stock standard of 100 shares.

Odd-Lot Shares

Stock shares are generally bought in bulk purchases of 100 shares known as round lots. Anything less than 100 denotes an odd-lot share. Odd-lot shares provide an investment opportunity but without the high stakes or high cost of a large stock purchase and allow individuals or small investment firms the opportunity to hold stocks in larger corporations.


While odd-lot shareholders may not own most of the stock in a corporation, they often find it easier to sell shares in smaller numbers. Generally, odd-lot shares sell for a good price and don't incur many brokerage fees. Shareholders with odd-lot shares also enjoy a higher priority when the shares are bought back. Corporations are generally more willing to buy back the odd lots because of the reduced overhead and smaller administrative costs when compared with larger round-lot share purchases.

Dutch Auctions

A Dutch auction -- one of the more popular methods of buying back odd-lot shares through a tender offer -- occurs when shareholders give a specified buy-back price range to the corporation. The company then buys back the odd-lot shares at the same price. This benefits the shareholders, who get the best price for their stock, and the corporation, which maximizes the number of stocks it buys back with an even price across the shareholders.