Question
Which of the following defense technique is used by a
target firm to prevent or discourage a potential hostile takeover by an acquiring company? Read the following passage and answer the next 4 question (Q27-Q30) Corporate restructuring is an action taken by the corporate entity to modify its capital structure or its operations significantly. Generally, corporate restructuring happens when a corporate entity is experiencing significant problems and is in financial jeopardy. The process of corporate restructuring is considered very important to eliminate all the financial crisis and enhance the company’s performance. The management of the concerned corporate entity facing the financial crunches hires a financial and legal expert for advisory and assistance in the negotiation and the transaction deals. Usually, the concerned entity may look at debt financing, operations reduction, any portion of the company to interested investors. In addition to this, the need for corporate restructuring arises due to the change in the ownership structure of a company. Such change in the ownership structure of the company might be due to the takeover, merger, adverse economic conditions, adverse changes in business such as buyouts, bankruptcy, lack of integration between the divisions, over-employed personnel, etc.Solution
The term poison pill refers to a defensive technique used by a target firm to avoid or deter an acquiring business from taking the risk of a hostile takeover. Prospective targets use this strategy to make the potential acquirer appear less appealing to them · A golden parachute consists of substantial benefits given to top executives if the company is taken over by another firm, and the executives are terminated as a result of the merger or takeover. · Greenmail is the practice of buying enough shares in a company to threaten a hostile takeover so that the target company will instead repurchase its shares at a premium. · Crown Jewel defense mechanism involves the target company spinning off its crown jewel unit, or its most valued asset, in order to make the acquisition less desirable for the acquirer. The asset could be the unit that is the most profitable unit in the company or is important for future profitability or produces the flagship product of the company. · The Pac-Man defense is a defensive mechanism used against the hostile takeover, wherein the target firm turns around the table and acquires the firm that has made the hostile bid or has initiated the takeover.
Where was India's 500th Community Radio Station "Apna Radio 90.0 FM" inaugurated by the Union Ministry of Information and Broadcasting in July 2024?
Who is the author of the book "An Uncommon Love: The Early Life of Sudha and Narayana Murthy," which provides an intimate view into the lives of the co-...
Which company topped the list of the most valuable unlisted companies in the 2023 Burgundy Private Hurun India 500 report?
Which cooperative bank's license was recently revoked by the Reserve Bank of India due to insufficient capital and earnings prospects, leading to its cl...
The Union Government issued a Gazetted Notification for enforcing sections 6-8, 48, and 59(b) of the Telecommunications Act, 2023 effective from July 05...
What was the growth rate of India's gross GST collections in July 2024 compared to the previous month?
How did the 2024 Cannes Film Festival mark a notable moment for Indian cinema?
What is the title of the book launched by renowned author M.J. Akbar, along with co-author K. Natwar Singh?
According to the Economic Survey 2023-24, which sector is expected to have the lowest per capita land availability among the G20 countries, posing a cha...
Which state government recently launched the ‘Mukhya Mantri Kisan Samman Nidhi’ Scheme to provide eligible farmers Rs 2000 per year for purchasing f...
