Fact Pattern 40-2B
Mega Corporation wants to gain control of MiniCo, Inc. The companies negoti?ate for several months, without coming to terms. Mega decides to pursue a takeover at?tempt. MiniCo decides to resist.
-Refer to Fact Pattern 40-2B. MiniCo issues shares that its shareholders can exchange for cash if a takeover is successful, intending to make Mega's takeover attempt too expensive. This is a
A) crown jewel defense.
B) Pac-Man defense.
C) poison pill defense.
D) white knight defense.

Question

Fact Pattern 40-2B 
Mega Corporation wants to gain control of MiniCo, Inc. The companies negoti?ate for several months, without coming to terms. Mega decides to pursue a takeover at?tempt. MiniCo decides to resist.
-Refer to Fact Pattern 40-2B. MiniCo issues shares that its shareholders can exchange for cash if a takeover is successful, intending to make Mega's takeover attempt too expensive. This is a
A) crown jewel defense.
B) Pac-Man defense.
C) poison pill defense.
D) white knight defense.

Quizplus · Accepted Answer

MiniCo's issuance of shares that shareholders can exchange for cash if a takeover is successful is a poison pill defense, as it makes the takeover too expensive for Mega Corporation. Crown jewel defense involves the target company selling off its most valuable assets to make itself less appealing, Pac-Man defense involves the target company turning around and attempting to acquire the acquirer in a hostile takeover bid, and white knight defense involves the target company finding a friendly company to acquire it instead of the hostile acquirer. None of these options are present in the fact pattern.