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Finance Dictionary and Glossary of Investment Terms
hedged tender
Definition 1.
The short sale of some portion of the shares in a tender offer to protect against the risk of loss in the event that all tendered shares are not accepted.
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Definition 2.
A strategy in a tender offer where an investor short sells a portion of the shares they own. This is to protect against the risk of loss in the event that the tender offer does not go through.
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Definition 3.
An investor sells a portion of a stock holding short a tender offer in the event all shares tendered are not accepted. For example, investor Q has 5000 shares of XYZ. An acquiring company makes a tender offer of $100 a share when the shares are currently worth $80. Investor Q short-sells 2500 shares after the announcement and the price of the stock has approached $100. Company XYZ purchases only 2500 of the original shares at $100. Investor Q has sold all shares at $100 even as the price of the stock drops on a post-news dip.
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