The following takeover defenses are generally put in place by a firm before a takeover attempt is initiated.

Question

Quizplus · Accepted Answer

Poison pills are the most common and effective takeover defense mechanisms. They aim to make the target firm less attractive to the acquirer. This can be achieved in various ways, such as issuing new shares at a discounted price, granting existing shareholders the right to buy additional shares at a discounted price, or making the target firm less profitable by taking on debt or selling off assets. These tactics make it costlier for the acquirer to gain control and reduce the likelihood of a successful takeover. Standstill agreements, recapitalization, corporate restructuring, and greenmail are also used as takeover defenses, but they are less effective or less commonly employed than poison pills.

The Following Takeover Defenses Are Generally Put in Place by a Firm