You belong to a crate club for Star Wars merchandise. For $15 a month, you receive a box every few weeks filled with Star Wars-related swag. T-shirts. Jammie pants. Action figures. Stickers. All sorts of stuff.
Then they have a special offer. Because you subscribe to the Star Wars crate, you can receive the Marvel crate for $10 a month. Any nerds off the street have to pay the full $15-a-month price. But you, as an insider, get the special one-third-off pricing.
That's fundamentally the same process that takes place in an open offer. A company wants to sell stock. Instead of offering it on the public market, it offers the new shares to existing shareholders at a discount to the current trading price. The process, which works similar to a rights offering, lets the company raise money through a stock offering in an efficient way.
For the company, it saves all the rigmarole of conducting a secondary offering. For the shareholders, they get the opportunity to get a members-only-style discount on the new stock.
