An offer to acquire all of the outstanding shares of a firm by purchasing a controlling interest in the firm at a specific price for part of it and then reducing the price per share offer for the remaining part. Such a strategy is meant to give a higher incentive for target shareholders to tender by offering a high first-tier premium and subsequently a rather low second-tier premium.

The difference between the two premiums represents the opportunity cost to shareholders of the target firm. The higher the cost, the less probable the target shareholders would be willing to tender.