Exclusionary Self Tenders

An exclusionary self-tender is the opposite of a targeted repurchase. Here the firm makes a tender offer for a given amount of its own stock while excluding targeted stockholders.

In one of the most celebrated cases in merger history, Unocal, a large integrated oil firm, made a tender offer for 29 percent of its shares while excluding its largest shareholder, Mesa Partners II (led by T. Boone Pickens). Unocal's self-tender was for $72 per share, which was $26 over the prevailing market price. It was designed to defeat Mesa's attempted takeover of Unocal by, in effect, transferring wealth from Mesa to Unocal's other stockholders.

At present, it appears that an exclusionary self-tender is likely to be viewed as an illegal form of discrimination against one group of stockholders.

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