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)A Reverse-takeover.

Question

Quizplus · Accepted Answer

The tactic employed by Company B is known as a poison pill. This is a strategy used by a target company to make its stock less attractive to the acquiring company. By offering its shareholders the opportunity to purchase additional shares at a discounted price, Company B effectively dilutes the value of its stock and makes it more expensive for Company A to acquire a controlling stake.

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