A contract that limits the holdings of a bidder to a minority stake in the target ﬁrm is called a:
A) Supermajority amendment.
B) Standstill agreement.
C) Greenmail provision.
D) Poison pill amendment.
E) White knight provision.

Question

Quizplus · Accepted Answer

A standstill agreement is a contract between a bidder and the target firm, which limits the bidder's ability to acquire a controlling stake in the target firm. It is used to prevent hostile takeovers and to provide the target firm with time to evaluate any proposals made by the bidder. The bidder agrees not to purchase any additional shares or launch a hostile bid for a set period of time.

A Contract That Limits the Holdings of a Bidder to a Minority