Company A makes a hostile take-over bid for control of Company B In response, Company B makes a counter-offer to purchase shares from Company A's shareholders. Which of the following best describes Company B's response?
A) Pac-man defence.
B) Selling the crown jewels.
C) Poison pill.
D) Hostile defence.

Question

Quizplus · Accepted Answer

Company B's response is a type of Pac-man defence, which involves turning the tables on the hostile bidder by attempting to acquire their company instead. This strategy gets its name from the popular video game, where the player-controlled character turns the tables on its enemies by "eating" them. Selling the crown jewels refers to the sale of valuable assets to deter the hostile bidder, while a poison pill involves making the acquisition less attractive through actions such as issuing new shares or incurring excessive debt. A hostile defence is a general term for any strategy used by a target company to resist a hostile takeover.

Company a Makes a Hostile Take-Over Bid for Control of Company