Self-Tender Defense

DEFINITION of 'Self-Tender Defense'

A form of takeover defense against a hostile bid, in which the target company undertakes a tender offer for its own shares, i.e. a "self tender." A self-tender defense can be triggered if management of the target company does not accede to the potential acquisition because it views the hostile bid as opportunistic or one that undervalues its shares. The objective of the self tender is to make the cost of acquiring the company prohibitively expensive to the hostile bidder, or reducing its attraction by adding debt to finance the tender, to the point where the bidder may be forced to walk away from the deal.

BREAKING DOWN 'Self-Tender Defense'

A self tender is usually for a limited number of shares, since there may be cash and other constraints that prevent a large-scale tender, and is seldom at a price that is higher than the hostile bid. The self tender is not used in isolation as a takeover defense mechanism, but is generally used along with other strategies to ward off unwelcome advances, such as super-majority provisions and staggered board elections.










RELATED TERMS
  1. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
  2. Hostile Bid

    A specific type of takeover bid that is presented directly to ...
  3. Hedged Tender

    A strategy in a tender offer where an investor short sells a ...
  4. Creeping Tender Offer

    A takeover strategy involving the gradual acquisition of the ...
  5. Proration

    A situation during a corporate action in which the available ...
  6. Hostile Takeover

    The acquisition of one company (called the target company) by ...
Related Articles
  1. Investing

    How Does a Tender Work?

    Tender usually refers to the process in which governments invite suppliers to bid for the right to work on large projects.
  2. Investing

    Explaining Tender Offers

    A tender offer is a broad public offer made by a person or company to purchase all or a portion of the shares of a publicly traded company.
  3. Markets

    3 Benefits of a Successful Tender Offer: Cliffs Natural (CLF)

    Learn about the potential benefits that the debt tender offer by Cliffs Natural Resources had for the company's balance sheet and income statement.
  4. Investing

    Warding Off Hostile Takeovers

    The purpose of this article is to provide a general overview of hostile corporate takeovers, while highlighting a general course of action against such activity. This article provides basic information ...
  5. Investing

    What is a Takeover?

    A takeover happens when one company makes a bid to acquire a target company.
  6. ETFs & Mutual Funds

    Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  7. Trading

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  8. Investing

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  9. Markets

    What's an Acquisition?

    In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring ...
  10. Trading

    Guard Your Portfolio With Defensive Stocks

    Find out how these securities can protect you from a market bust.
RELATED FAQS
  1. How is a tender offer used by an individual, group or company seeking to purchase ...

    Learn how tender offers are used in takeover attempts, and understand the difference between a hostile takeover and a friendly ... Read Answer >>
  2. What happens to the shares of stock purchased in a tender offer?

    Learn what a tender offer is, whether it is a good idea to accept a tender offer and what happens to the shares of stock ... Read Answer >>
  3. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Learn why it may often be in the best interest of a shareholder to accept a tender offer made at a premium to the market ... Read Answer >>
  4. Why would it be in the interest of shareholders to accept a tender offer?

    Learn when it is in the best interests of shareholders to accept a tender offer. A tender offer is a bid to buy a large portion ... Read Answer >>
  5. What usually happens to the price of a stock when a tender offer for shares of the ...

    Learn what happens to the price of a stock when a tender offer is made public. Some of the most contentious takeovers have ... Read Answer >>
  6. How can a company resist a hostile takeover?

    Learn about some of the defense strategies a public company's board of directors might employ to prevent a hostile bidder ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center