The primary purpose of a flip-over provision is to:
A) Increase the number of shares outstanding while also increasing the value per share.
B) Dilute a corporate raider's ownership position thereby increasing the cost of a takeover.
C) Reduce the market value of each share of stock.
D) Give the existing corporate directors the sole right to remove a poison pill.
E) Provide additional compensation to any senior managers who lose their jobs as a result of a corporate takeover.

Question

Quizplus · Accepted Answer

A flip-over provision is designed to dilute the ownership of a potential acquirer (corporate raider) by allowing existing shareholders (except for the acquirer) to purchase additional shares at a discount, thus making a takeover more expensive and less attractive.

The Primary Purpose of a Flip-Over Provision Is To