Roger is a major shareholder in RB Industrial Supply.Currently,Roger is quite unhappy with the direction the firm is headed and is rumored to be considering an attempt to take over the firm by soliciting the votes of other shareholders.To head off this potential attempt,the board of RB Industrial Supply has decided to offer Roger $35 a share for all the shares he owns in the firm.The current market value per share is $32.This offer to purchase Roger's shares is commonly referred to as:
A)a golden parachute.
B)standstill payments.
C)greenmail.
D)a poison pill.
E)a white knight.

Question

Quizplus · Accepted Answer

This offer is referred to as "greenmail," which is a situation where a company repurchases its shares from a potential acquirer (in this case, Roger) at a premium to the current market value to prevent a takeover attempt.

Roger Is a Major Shareholder in RB Industrial Supply