Asked by Carol Hersan on Jun 15, 2024
Verified
Which of the following defensive tactics is not appropriate before a takeover attempt is underway?
A) Poison pills
B) Staggered election of directors
C) Golden parachutes
D) Greenmail
Poison Pills
Strategies employed by companies to deter hostile takeovers, making the company less attractive to potential acquirers.
Takeover Attempt
An effort by one company to acquire control over another company, often by purchasing a significant portion of its stock.
Golden Parachutes
Contractual agreements that provide senior executives with significant benefits in the event that they are terminated as a result of a merger or takeover.
- Differentiate the tactics employed to protect against corporate takeover attempts.
Verified Answer
GM
Gabriella Melendez-RodriguezJun 20, 2024
Final Answer :
D
Explanation :
Greenmail is a defensive tactic used during a takeover attempt where the target company repurchases the hostile bidder's shares at a premium above the market price in order to prevent a takeover. This tactic is not appropriate before a takeover attempt is underway because there is no hostile bidder to repurchase shares from. Poison pills, staggered election of directors, and golden parachutes are all pre-emptive defensive tactics that can be implemented before a takeover attempt to deter hostile bidders.
Learning Objectives
- Differentiate the tactics employed to protect against corporate takeover attempts.