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.

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.


Filed Under: ,

comments powered by Disqus
Hot Definitions
  1. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  2. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
  3. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
  4. Marginal Analysis

    An examination of the additional benefits of an activity compared to the additional costs of that activity. Companies use marginal analysis as a decision-making tool to help them maximize their profits. Individuals unconsciously use marginal analysis to make a host of everyday decisions. Marginal analysis is also widely used in microeconomics when analyzing how a complex system is affected by marginal manipulation of its comprising variables.
  5. Treasury Inflation Protected Securities - TIPS

    A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.
  6. Gilt-Edged Switching

    The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security, which can be high-grade stock or bond issued by a financially stable company such as the Blue Chip companies or by certain governments.
Trading Center