Legal Definitions - Pac-Man defense

The Pac-Man defense is a strategy used by a company to prevent a hostile takeover attempt by turning the tables and trying to take over the bidder company instead. This is done by making a cash tender offer for the shares of the bidder company.

The name of this defense comes from a popular video game in the 1980s, where the player controlled a character named Pac-Man who had to eat all the enemies to win.

An example of the Pac-Man defense is when a company, let's call it Company A, is being targeted for a hostile takeover by Company B. Instead of just defending itself, Company A decides to make a cash tender offer for the shares of Company B, effectively trying to take over Company B. This can make the bidder company think twice about continuing with the takeover attempt.

The Pac-Man defense is not commonly used today, but it was a popular strategy in the past.