What is an open offer?

When is an open offer triggered?

An open offer is triggered the moment an acquirer crosses 25% of a listed company’s voting rights, or acquires control of it, whichever comes first. The SAST Regulations treat 25% as the line past which a buyer is presumed to be reaching for the company, not just investing in it. Cross it, and the acquirer must offer to buy from everyone else too.

Control is the second trigger, and it has no percentage attached. The right to appoint a majority of directors, or to direct management and policy decisions, counts as control even at a lower shareholding, which is why some open offers come from acquirers holding well under 25%.

There is one large exception built into the same rules. A shareholder already between 25% and 75% can keep buying up to 5% of voting rights in a financial year without triggering a fresh offer. This is creeping acquisition, and sustained creeping acquisition quarter after quarter is one of the patterns worth watching: it is how promoters tighten their grip without ever firing the open-offer trigger. Those purchases surface as SAST and PIT disclosures on the exchanges.

How big must the offer be, and at what price?

The offer must be for at least 26% of the company’s shares. Combined with the 25% that triggered it, the rule is built so that an acquirer who wants the company can reach a majority through the offer, while public shareholders who want out get a guaranteed buyer for a meaningful slice of their holding.

Price is not left to the acquirer. The SAST Regulations set a floor by looking back at historical traded prices — the negotiated price for the underlying deal, the highest price the acquirer paid in the preceding period, and volume-weighted averages over defined windows. The offer price is the highest of these. The mechanism is designed to stop an acquirer from buying control cheaply in a private deal and then squeezing public holders out below what the stake was actually worth.

What happens during an open offer?

An open offer runs as a sequence, and each step is a public filing. It opens with a public announcement on the day the trigger is hit, naming the acquirer and the offer. A detailed public statement follows in the press with the price and terms. Then a letter of offer, vetted by SEBI, goes to shareholders. Finally a tendering window opens — 10 working days, fixed by SAST Regulation 18 — in which shareholders decide whether to sell.

The gap between announcement and tendering is where the market does its work. The stock often trades toward the offer price, and the spread between the two tells you what the market thinks of the deal’s certainty, a judgement that turns on the same materiality reading our methodology sets out.

Open offers vs buybacks vs delisting offers

These three look similar — someone is buying shares — but they are different events under different rules. An open offer is an outside acquirer or promoter buying from the public to gain or consolidate control. A buyback is the company itself repurchasing its own shares and extinguishing them, returning capital rather than changing who is in charge. A delisting offer goes further still: the promoter buys out the public entirely to take the company off the exchange, which needs a much higher acceptance and a reverse-book-building price.

Reading which one you are looking at tells you the acquirer’s intent before you read a single word of the rationale.

What it means for shareholders

An open offer is, at its core, a regulated exit. You are never forced to tender; you weigh the offer price against where the stock trades and where you think it is going. When the offer price sits below the market price, most holders keep their shares. When it sits above — often the case in a distressed situation — tendering can be the cleaner outcome.

The build-up usually shows before the announcement does. Stake disclosures crossing 5%, then steady creeping acquisition, are the early signals; the open offer is the confirmation. Catch the signals early and the confirmation is rarely a surprise; our M&A digests track the takeover activity as it lands, build-up and offer alike.