Which one of the following is an example of a poison pill?
A)A firm that sells its efficient business division because it interests the acquirer.
B)A firm that pays all its cash as dividends to existing shareholders because it interests the acquirer.
C)A firm that opens talks with another potential acquirer.
D)A firm that sells new shares to the existing shareholders at a discount in the event of a takeover.

Question

Quizplus · Accepted Answer

Selling new shares to existing shareholders at a discount, known as a "poison pill," dilutes the value of the firm and makes it less attractive to the acquiring company. This strategy is commonly used to deter hostile takeovers.

Which One of the Following Is an Example of a Poison