Throw a comma in there, and you've got "Short, Tender"...the title of the tear-jerking autobiography of the world's smallest man.
But in finance, the term refers to a situation that comes up when one company tries to buy another.
When someone looks to take over a public company, they run what's called a tender offer. They announce a price. Then anyone who wants to sell their stock at that price just has to let the buyer know. Basically, the buyer says, "We're buying all the stock anyone wants to sell at this particular price."
A short tender happens when someone borrows stock to sell it in the tender offer.
Think about how a short sale works. In that situation, you borrow stock as part of a maneuver to make money when a share price declines. You borrow the stock from someone else, sell it in the open market, and hope the share price declines. If it does, you can buy the stock back, return it to the lender, and pocket the profit.
The short tender has the same general dynamics. You borrow stock, and then you sell it. However, in this case, you aren't selling it in the open market...you're tendering it as part of the takeover offer.
There are rules against short tenders. You can borrow stock for a short sale, but not as part of a tender offer. Regulators see it as a little too much inside baseball...a practice ripe for potential corruption. So they've outlawed it.
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Finance: What is a Pac Man Defense?21 Views
Finance a la shmoop what is a pacman defense?
[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so
rare in pac-man but when they do happen there exists a whole cadre of strategies
behind defending them at least from the company's perspective being taken over
there and pac-man defense is inarguably the best named strategy of all of
them in essence what happens when we'll say an angry competitor let's call him
blinky Inc tries to buy an angrier competitor let's call them inky inc.
well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]
go past 15% ownership and eventually own enough shares to elect its own Board of
Directors and make a takeover happen well in a Pac Man defense as blinky is
snarfing up shares of inky, inky buys shares of blinky sort of turning the
tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]
don't forget to eat a bunch of cherries or a strawberry every once in a while
because you know you still need your fruits and veggies
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