Tender Offer Defense
Strategies used by a target company's board to resist or improve terms of an unwanted hostile acquisition bid.
What is Tender Offer Defense?
A tender offer defense is a strategy used by a target company's board of directors to resist, delay, or improve the terms of an unwanted hostile tender offer — a direct bid to shareholders to purchase their shares at a premium to the market price. Common defensive tactics include adopting a shareholder rights plan (poison pill), seeking a "white knight" friendly acquirer, pursuing a leveraged recapitalization, initiating litigation, or making acquisitions that create regulatory complications for the hostile bidder. Target boards must balance their fiduciary duties to maximize shareholder value against their right to adopt reasonable temporary defenses while exploring alternatives.
Example
When Sanofi launched a hostile $18.5 billion tender offer for Genzyme in 2010, Genzyme's board adopted a poison pill, rejected Sanofi's initial bid as inadequate, and engaged in a negotiation strategy that ultimately delivered shareholders $74 per share — well above Sanofi's opening $69 offer — representing a negotiated premium improvement of approximately 7% through the use of defensive tactics.
Source: SEC — Genzyme Corporation Schedule 14D-9 (Solicitation/Recommendation Statement)