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)white knight.
C)poison pill.
D)classified board.

Question

Quizplus · Accepted Answer

The described rights offering is known as a poison pill. It is designed to make a takeover less attractive to the acquiring company by diluting the value of the target company's shares or making it more costly to acquire a controlling stake. The discounted price offered to shareholders is meant to incentivize them to exercise their rights and buy more shares, further increasing the number of outstanding shares and making it more difficult for the acquirer to gain control.

A Rights Offering That Gives Existing Target Shareholders the Right