Definition
A failed tender offer is one in which the bidder does not accept tendered shares — typically because the minimum tender condition wasn’t met, a closing condition (financing, regulatory) failed, or the bidder voluntarily terminated.
What happens
- All tendered shares are returned to holders
- The target’s stock typically falls back toward (or below) the pre-announcement price
- Risk arbitrageurs incur losses on positions opened around the announcement
- The bidder may walk away, raise the price and re-launch, or pivot to a different structure
Why offers fail
- Insufficient tender support (usually because shareholders view the price as too low)
- Competing higher bid emerges
- Regulatory denial
- Target defenses (poison pill, white knight) succeed
- Material adverse change at the target
Reverse break fee
In sponsor LBOs and some strategic deals, a failed offer due to financing or regulatory reasons may trigger a reverse break fee payable from bidder to target.