Company A has made an offer to purchase all of the outstanding shares of Company B for $10 per share (the current market value of the shares). In response to Company A's offer, the shareholders of Company B were given rights to purchase additional shares at $8 per share. Which of the following tactics was employed by Company B to prevent Company A from acquiring control of Company B?
A) Pac-man defence.
B) Selling the crown jewels.
C) Poison Pill.
D)Reverse-takeover.

Question

Quizplus · Accepted Answer

The tactic employed by Company B is known as a "poison pill" defense. By offering existing shareholders the right to purchase additional shares at a discounted price, it makes the acquisition of Company B more expensive for Company A and less desirable. This is a common anti-takeover measure used by companies to protect themselves from hostile takeover attempts. The other options listed (Pac-man defense, selling the crown jewels, and reverse-takeover) are also common tactics employed by companies in response to hostile takeover attempts, but they are not applicable in this scenario.

Company a Has Made an Offer to Purchase All of the Outstanding