A hostile takeover is a situation in whicha. the management and board of directors of the targeted firm disapprove of the proposed merger. b. stockholders are paid a golden parachute. c. the targeted firm is dismantled to avoid the merger. d. the government makes the decision that the corporate raider can purchase the targeted firm. e. the corporate raider receives a sum of money to leave the targeted firm alone.

Question

Business

Nataly Madden

9 November, 11:30

A hostile takeover is a situation in whicha. the management and board of directors of the targeted firm disapprove of the proposed merger. b. stockholders are paid a golden parachute. c. the targeted firm is dismantled to avoid the merger. d. the government makes the decision that the corporate raider can purchase the targeted firm. e. the corporate raider receives a sum of money to leave the targeted firm alone.

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Issac Elliott · Answer 1

Answer: a - the management and board of directors of the targeted firm disapprove of the proposed merger

Explanation:

A hostile takeover is a situation where the board of directors and senior managers are against the proposed merger.

There are several pre-offer takeover defense mechanisms. One of them is the golden parachute.

The golden parachute is a compensation agreement between a firm and its senior managers. The firm promises a very lucrative amount of money if the senior managers leave the firm if there's a change of control.

There are also post offer takeover defense. They include:

A. The crown jewel - in a crown jewel the firm sells off a subsidiary or an asset to a third party in an effort to mitigate the hostile take over.

B. Greenmail - the target buys its shares back from the acquiring company at a price higher than the market price. This is done with an agreement that the acquirer leaves the target company. It is a form of payoff by the target company.