Able Ltd. offers to buy shares from the existing shareholders of Wei Co. at a premium price. The current management and board of directors of Wei have let the Wei shareholders know that they do not approve of this. This is an example of a(n)________.
A)open market purchase
B)hostile takeover
C)poison pill strategy
D)reverse takeover

Question

Quizplus · Accepted Answer

This scenario is an example of a hostile takeover, where Able Ltd. is making an offer to buy shares without the approval of the current management and board of directors of Wei Co. This usually happens when the acquiring company believes that it can run the target company more efficiently or extract more value from it through synergies.

Able Ltd Offers to Buy Shares from the Existing Shareholders of of Wei