Xanasoft Technologies wishes to acquire Mauvestone Computers.Aware of Xanasoft's plans,Mauvestone protects itself by letting Tenetric Solutions,a friendly company,acquire it under the condition that Tenetric would leave Mauvestone uncompromised in every way.This scenario is an example of a ________.

Question

Quizplus · Accepted Answer

This scenario is an example of a white knight merger, which is a defensive strategy used by a target company to protect itself from a hostile takeover. In this case, Mauvestone is being acquired by Tenetric Solutions, a friendly company, to protect itself from Xanasoft's acquisition intentions. The condition that Tenetric would leave Mauvestone uncompromised in every way ensures that Mauvestone's interests are protected. A flip-in rights plan and a flip-over rights plan are also defensive strategies used by target companies to protect themselves, but they involve issuing new securities to existing shareholders that can dilute the potential acquirer's stake. A reverse tender offer is a type of hostile takeover where the target company attempts to acquire the acquirer's shares.

Xanasoft Technologies Wishes to Acquire Mauvestone Computers