If a firm sells its crown jewels when threatened with a takeover attempt, the firm is employing a strategy commonly referred to as a ________ strategy.
A) scorched earth
B) shark repellent
C) bear hug
D) white knight
E) lockup

Question

Quizplus · Accepted Answer

A scorched earth strategy involves destroying or damaging valuable assets or making them less attractive to a potential acquirer. Selling its crown jewels can be considered a form of asset destruction because it reduces the attractiveness of the company to the acquirer. This strategy is often used as a last resort when the company's management is trying to fend off an unwanted takeover attempt. The other options listed are different strategies that a company can use to defend against a takeover attempt.

If a Firm Sells Its Crown Jewels When Threatened with a Takeover