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Proration: how much of a tender is actually bought

Albert Gasull, editor · 18 October 2026

When a tender offer seeks a fixed number of shares and more are tendered, the buyer takes the same fraction from every holder. That fraction is the proration factor: (shares accepted − odd lots) ÷ (shares tendered − odd lots). The return on a tender is then the premium times the factor, plus whatever happens to the shares handed back. Holders of fewer than 100 shares who tender all of them escape the factor, but only where the document grants odd-lot priority.

How the mechanism works

  1. The offer states how many shares the buyer will take: a number of shares, a dollar amount or a share of the class.
  2. US tender rules require every holder who tendered before expiry to be treated alike, so the buyer cannot fill its order first come, first served. When more shares are tendered than it seeks, it buys the same fraction from each holder.
  3. Where the document grants odd-lot priority, holders of fewer than 100 shares who tender all of them are bought in full first. The factor is worked out on everyone else.
  4. The buyer may take up to 2% more of the class without extending the offer. Using that right raises the factor.
  5. A first factor is often published before every share has arrived. Shares tendered by notice of guaranteed delivery count only once they are delivered, so a preliminary factor can still move.

The sentence to look for

In the final count, filed as an amendment to the tender offer statement:

“The final proration factor applied to tendered Medtronic Ordinary Shares subject to proration of 18.289133%”

And, before the offer closes, a section on odd lots in the offer document. Where there is none, every holder is prorated, whatever the size of the holding.

Worked example: Medtronic’s MiniMed exchange

Medtronic offered MiniMed shares for its own and closed the offer on 9 October 2026. Its final amendment of 14 October 2026 gives every number needed:

  1. Shares tendered: 297,521,390. Less odd lots accepted whole: 757,890. Tendered by everyone else: 296,763,500.
  2. Shares accepted: 55,032,401, including 5,975,762 taken under the extra 2%. Less the odd lots: 54,274,511 left for everyone else.
  3. Factor: 54,274,511 ÷ 296,763,500 = 18.289%; the filing prints 18.289133%. Without the extra shares it would have been about 16.28%.
  4. A tender of 1,000 shares: about 183 exchanged and 817 handed back. A tender of 99 shares as an odd lot: all 99 exchanged.
  5. At the final ratio of 4.5939 the exchange was worth $103.68 per $100 at the averaging prices: +3.68%. On the 1,000-share tender: +3.68% × 18.289133% = +0.67%, before any move in the 817 shares returned.

The same arithmetic on three other offers that finished within three weeks:

OfferFactor99 shares tendered: bought
Medtronic exchange, final, odd lots whole18.289133%all 99
Sturm Ruger partial offer, preliminary, no odd-lot clause~38.45%about 38
Arbutus Dutch auction, final, odd lots whole~55.6%all 99
Virtus NFJ fund tender, final, no odd-lot priority~80.67%about 80

Sturm Ruger shows why a preliminary factor is provisional. Beretta sought up to 2,400,184 shares and received 3,589,647 delivered plus 2,652,256 by notice of guaranteed delivery: 2,400,184 ÷ 6,241,903 = 38.45%. If some of the promised shares never arrive, the divisor shrinks and the final factor rises.

Where it goes wrong

  • Reading the headline premium as the return. The premium applies to the part bought. On Medtronic, +3.68% on the part became +0.67% on a 1,000-share tender.
  • Reading the preliminary factor as final. While guaranteed deliveries are outstanding, the divisor is an estimate. Medtronic’s preliminary ~18.3% held; Sturm Ruger’s can still rise.
  • Forgetting the shares handed back. They return at the market price after expiry, often below the price paid for them, and that move can be larger than the whole gain on the part bought.
  • Assuming odd-lot priority exists. The size that escapes proration is the same wherever it exists, under 100 shares, but whether it exists is in the document and nowhere else. At Sturm Ruger and Virtus NFJ a holder of 99 is cut back like everyone else.

How to check it

  • The offer document shows whether there is an odd-lot section and who qualifies for it.
  • The offer document states the number of shares sought and whether the buyer may take up to 2% more without extending.
  • The preliminary results release shows shares delivered and shares tendered by guaranteed delivery as separate figures.
  • The final amendment to the tender offer statement shows the final factor and the total accepted.
  • The broker’s account shows the accepted shares leaving and the returned shares coming back, with the dates.

Sources

Author holds: Medtronic, Sturm Ruger, Arbutus and Virtus NFJ, no (18 October 2026). 99 Shares is information, not advice, and nothing here is a recommendation to buy, sell or tender any security. Terms of use.