Say, I own 100 shares of a stock which announces buyback.
Say Entitlement Ratio is 5%.
So min 5 shares if tendered will be accepted.
If Acceptance Ratio is 30%,
If I tender all 100 shares, 30 shares will be accepted.
What if I tender 30 shares? Will all 30 be accepted?
Or in other words, If I tender 50 shares, will 30 be accepted or 15?
Accepted shares will not cross the max shares we held on record date.
Just wondering if the AR is calculated based on tendered shares or based on held shares as of RD. Logically it makes more sense for it be based on tendered shares. Will wait for experts to confirm.
Acceptance ratio is always based on what was held in record date.
But of course you have to tender the enough quantity of shares to get it in buyback.
Only 9 (30% of tendered)
Similarly, 15 will be accepted.
PS: This is why AR>ER always, since AR is calculated on the base of tendered shares. Many unaware/ uninterested holders don’t participate.
Below is verbatim from TCS buyback 2022 offer letter:
So while Entitlement ratio is calculated based on number of shares held on record date. Actual Acceptance ratio depends on number of shares tendered.
So any additional shares left will be distributed based on number of shares tendered.
What TCS sent you before tender date is “Entitlement ratio” and not “Acceptance Ratio”. Entitlement is calculated based on record date holding. Something like below
Acceptance is calculated only after tendering ends, based on number of shares tendered.
ok deleted my post to avoid confusion for other readers
