A rights offering that gives existing target shareholders the right to buy shares in either the target or the acquirer at a deeply discounted price once certain conditions are met is called a:
A)golden parachute.
B)poison pill.
C)classified board.
D)white knight.

Question

Quizplus · Accepted Answer

This is describing a specific type of poison pill known as a "flip-in" rights plan, which is intended to dilute the value of the acquirer's shares and make the acquisition less attractive. The existing target shareholders are given the right to buy additional shares at a discount if the acquirer tries to take over the company, which would increase the number of outstanding shares and decrease the acquirer's ownership percentage.

A Rights Offering That Gives Existing Target Shareholders the Right