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.
Related or Semi-related Video
Finance: What is a poison pill?4 Views
Finance allah shmoop what is a poison pill O romeo
romeo Wherefore out the ac Well if you can't have
me nobody can have me pill lug dead dead alright
that's poison pill allah romeo and juliet and performed by
your friends here and the corporate version Well it isn't
all that different In fact there are really two flavors
of poison pill flintstones chewable lt's called flip ins which
allow current shareholders to buy a ton more shares at
a big discount toe where their shares are currently trading
flippen like if the shares are at forty bucks each
current shareholder than gets allowed to buy five shares for
ten bucks each for each share that they currently own
and have owned for the last in a year About
that would be a flipping well this flip in process
dilutes the company dramatically making it harder for an outside
takeover soldier to come in and you know just buy
the company that's a flip in the non chewable flintstone
flavor that you have to actually swallow is called ah
flip over which comes is a mandate from the board
allowing current shareholders to buy the shares of the acquirer
After the merger at a big discount it basically destroys
enormous value in the combined company making It tastes like
a bitter moth to ah hungry bat so you know
he spits it out The basic idea in these poison
pill defense strategies is to deal with hostile takeovers And
a lot of those came during the junk bond era
in the nineteen eighties when cheap high risk capital was
liquid Lee easily available almost anywhere and companies felt vulnerable
to short term quick buck wall street sharpies who looked
great in a dark suit and usually had awesome hair
So yeah people for details carefully watch wall street the
first one the good one the one with michael douglas
when he still had hair and what you don't really 00:01:54.212 --> [endTime] hear there is he said Shmoop is good yeah
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