Definition
The Pac-Man defense is a counterattack in which the target launches its own tender offer for the hostile bidder’s stock — turning the tables. Named after the arcade game where the player switches from prey to predator.
Why it works (rarely)
Pac-Man requires the target to have:
- The financial resources to mount a credible counter-bid
- A bidder that is itself publicly traded
- Strategic logic for the reverse acquisition
Modern use
Almost never seen in modern M&A. The financial and strategic preconditions rarely line up. The defense survives mainly as M&A folklore.
Famous example
Bendix’s 1982 attempt to acquire Martin Marietta — Martin Marietta retaliated with a Pac-Man bid for Bendix. Both companies ended up acquired by other parties (Allied Corp acquired Bendix; Martin Marietta acquired by Lockheed in 1995).