Self-Tender Defense

AAA

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.

INVESTOPEDIA EXPLAINS '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. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Kamikaze Defense

    A type of takeover defense mechanism sometimes resorted to by ...
  3. Takeover Artist

    An investor or company whose primary goal is to identify companies ...
  4. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  5. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
Related Articles
  1. Trade Takeover Stocks With Merger Arbitrage
    Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

  2. Trademarks Of A Takeover Target
    Bonds & Fixed Income

    Trademarks Of A Takeover Target

  3. Pinpoint Takeovers First
    Options & Futures

    Pinpoint Takeovers First

  4. Corporate Takeover Defense: A Shareholder's ...
    Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's ...

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center