Open offer: What is it and how does it provides an exit option for the shareholders

An open offer is a secondary market offering that enables current owners in a firm to buy new shares in the company on a pre-emptive basis at a price lower than the prevailing market value. Now, the company announces an open offer and for every five shares you already own, you can purchase an additional one. In India, an open offer is often activated when a company buys up to 15% of the shares of another listed company. In such circumstances, an open offer to buy an additional 20% of the company's shares will be made to the current shareholders.