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why would someone make a tender offer?

Usually it is either to reduce the number of shareholders, e.g. if you have 5 shares of a stock the company may make an offer to buy those shares back so that it is one less proxy and annual report to send out, make an acquisition like HP's buying Mercury Interactive, or because the company is doing a large buyback.

Why not just buy shares on the market? Is it because they're buying so many that the stock price may go up?

Yes to the second question which should answer the first one.

And if so, is the point to keep the price from getting to high, or to keep from making yourself look suspicious, as if you're trying to artificially inflate the price?

Usually either the limited number of shareholders receiving the offer, or that the price has a ceiling in the offer. Last but not least, don't forget that tender offers could go bad if a merger doesn't happen. Remember when GE and Honeywell were going to merge? Didn't happen, right?

Arbitrageurs tend to keep the prices in check in these situations since if the tender offer for all shares is say $52, they aren't about to pay more than $51.99 I'd think.

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