What is the difference between open market buyback and tender offer buyback?

Buyback can be issued through a tender route or open market mechanism.

In a tender offer, companies acquire their shares from investors at a fixed buyback price that is generally above the current market price of shares. Tender buyback generally remains open for 10 days wherein investors can tender their shares.

However, when buybacks are announced via an open market mechanism, a company repurchases its shares in the open market. As per SEBI, in an open market buyback, a company can repurchase its shares at any price ceiling within the 1% range over the last traded price.

For instance, if the last traded price of company’s share is Rs 200 on Monday, the shares can be repurchased at any price between Rs 98 to Rs 202.

Open market offer buyback programs remain open for an extended period of time say a few months. After 1^st April 2025, no company can do an open market buyback through stock exchange mechanism.