In defending against a hostile takeover, the strategy that involves the firm repurchasing through negotiation a large block of stock at a premium from one or more shareholders in order to end those shareholders' hostile takeover attempt is known as the __________strategy.
A) poison pill
B) golden parachute
C) shark repellent
D) greenmail

Question

Quizplus · Accepted Answer

The strategy described is known as greenmail. This involves a company buying back a large block of stock from a shareholder who is attempting a hostile takeover at a premium price, in order to prevent the takeover from being successful. The shareholder may agree to sell their shares back to the company to make a profit and avoid a potential loss if the takeover attempt fails. This strategy is considered controversial and may be viewed unfavorably by other shareholders.

In Defending Against a Hostile Takeover, the Strategy That Involves