Tender Offer Defense Expense Insurance

What Does Tender Offer Defense Expense Insurance Mean?

Tender offer defense expense insurance is a policy designed to protect a company that takes legal action to prevent its shares from being purchased or acquired by another individual or company. This insurance covers the costs associated with such legal efforts, including litigation expenses.

Insuranceopedia Explains Tender Offer Defense Expense Insurance

A company can become the target of a hostile takeover, where an individual or another company attempts to purchase a majority of its shares by offering stockholders a price higher than the market value. To prevent the acquisition, the company may take action.

This could involve making a counteroffer to the stockholders or pursuing legal action. Civil proceedings, however, can be expensive and strain the company’s financial resources. Tender offer defense expense insurance helps cover these costs, alleviating the financial burden on the company. Because these legal battles can run into the millions, companies often pair this coverage with broader professional liability insurance to protect against other claims that arise during or after a takeover attempt.

For additional protection against large legal judgments that exceed the limits of a primary policy, many corporate buyers also carry commercial umbrella insurance.