Explanation

Share Repurchase Methods Cost Comparison:

• Fixed Price Tender Offer: The company offers to buy back shares at a specific fixed price, usually at a premium to the current market price. This method typically has the highest cost because:

  • The company must set a price high enough to attract sufficient shares
  • The premium is fixed and cannot be adjusted based on shareholder responses
  • There's no price discovery mechanism

• Dutch Auction Tender Offer: Shareholders specify the price at which they are willing to sell, and the company selects the lowest price that allows it to buy the desired number of shares. This method is generally less expensive because:

  • The company pays the lowest price needed to complete the repurchase
  • Price discovery occurs through the auction process
  • Shareholders compete to offer lower prices

Therefore, fixed price tender offers most likely have the highest cost for a company.