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.

  1. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
  2. Hedged Tender

    A strategy in a tender offer where an investor short sells a ...
  3. Schedule TO-I

    This schedule is known as an "issuer tender offer statement." ...
  4. Hostile Takeover

    A hostile takeover is the acquisition of one company by another ...
  5. Cost Of Tender

    Cost of tender is the total charges associated with the delivery ...
  6. Saturday Night Special

    An obsolete takeover strategy where one company attempted a takeover ...
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  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. 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 >>
  3. 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 >>
  4. 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 >>
  5. What's the difference between a merger and a hostile takeover?

    Understand the difference between a merger and a hostile takeover, including the different ways one company can acquire another, ... Read Answer >>
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