Dutch Auction Tender Offer
A share repurchase mechanism where shareholders bid minimum prices and the company pays one clearing price for all accepted shares.
What is Dutch Auction Tender?
A Dutch auction tender offer (also called a modified Dutch auction) is a method for repurchasing shares in which the company announces a price range and invites shareholders to submit tenders specifying the minimum price they will accept within that range. The company then determines the lowest single clearing price at which it can buy the desired number of shares—accepting all tenders at or below that price and rejecting those above it. All accepted shareholders receive the same clearing price, regardless of their individual bid. This mechanism allows the company to repurchase a specified dollar amount of shares efficiently while ensuring all selling shareholders receive a uniform, market-clearing price, eliminating the negotiation inefficiency of fixed-price tender offers.
Example
In June 2021, Dell Technologies Inc. completed a modified Dutch auction self-tender offer to repurchase approximately 32.7 million shares of its Class C common stock. The offer price range was set at $43.00–$53.00 per share. The clearing price was established at $53.00 per share, the top of the range, resulting in a total repurchase of approximately $1.73 billion. All shareholders who tendered at or below $53.00 received the full $53.00 clearing price.