Definition
An odd-lot preference is a feature of some tender offers that gives priority acceptance to holders of fewer than 100 shares (an “odd lot”). Odd-lot holders who tender all their shares are accepted in full, ahead of any pro-rata cutback applied to round-lot tenders.
Why it matters
- Helps small holders avoid odd-lot trading commissions
- Lets the company (or bidder) clean up a long tail of small holders, reducing record-holder count and ongoing administrative cost
- Considered shareholder-friendly and rarely controversial
Mechanics under oversubscription
If the offer is oversubscribed:
- Odd-lot tenders are accepted in full first
- Round-lot tenders are accepted pro-rata for the remaining cap
Distinction
Odd-lot preference is a feature of a regular tender offer. Mini-tender is the entire offer structure.