In defending against a hostile takeover, the strategy that involves the firm repurchasing through negotiation a large block of stock at a premium from one or more shareholders in order to end those shareholders' hostile takeover attempt is known as the ________ strategy.
A) poison pill
B) greenmail
C) golden parachute
D) shark repellent

Question

Quizplus · Accepted Answer

The strategy described is known as greenmail, which involves the firm buying back shares at a premium from a shareholder who is threatening a hostile takeover, in order to prevent the takeover from happening. Poison pills involve implementing measures to make a takeover less desirable, golden parachutes involve providing lucrative benefits to top executives in the event of a takeover, and shark repellent involves implementing anti-takeover provisions in the company's bylaws or charter.

In Defending Against a Hostile Takeover, the Strategy That Involves