Anheuser-Busch reduced its anti-takeover defenses in 2006 when it removed its staggered board structure. Two
years earlier, it did not renew its poison pill provision. Speculate as to why the board acquiesced in these
instances? Explain how these events affected the firm's vulnerability to a takeover

Question

Quizplus · Accepted Answer

The Answer is The board succumbed to the groundswell for adopting good governance practices following the Enron
debacle in 2001. The firm is more vulnerable without the staggered board structure, because all directors are up for
reelection each year increasing the chances that a dissident shareholder can replace the board with their own slate
of candidates. Furthermore, a takeover would be theoretically cheaper for a bidder. The removal of the poison pill
eliminates the specter of the number of outstanding shares increasing once the bidder's target firm share purchases
exceeded the threshold necessary to allow holders of the poison pill to exercise their rights to purchase more target
or acquirer shares.

Anheuser-Busch Reduced Its Anti-Takeover Defenses in 2006 When It Removed