Two-Tier Offer Law and Legal Definition

Two-tier offer refers to a two-step technique by which a bidder tries to acquire a target corporation. The first step involves a cash tender offer and the second step involves a merger in which the company’s remaining shareholders receive securities from the bidder. However, these securities are less favorable than the cash given in the first step.

In Moran v. Household International, Inc., 490 A.2d 1059, 1067 (Del. Ch. 1985), it was held that a two-tier offer is typically front-end loaded since the premium offered in the first phase is greater than the consideration extended in the second phase following a merger.