A rights offer made to existing shareholders with the sole purpose of making it more difficult for another firm to acquire the company is called
A) a preemptive right.
B) a poison pill.
C) ex-rights.
D) rights-on.

Question

Quizplus · Accepted Answer

A poison pill is a tactic used by a company to prevent a hostile takeover by making the target company less attractive to the acquirer. A rights offer, also known as a rights issue or rights offering, is a type of poison pill that gives existing shareholders the right to purchase additional shares at a discount, thereby diluting the ownership of the acquirer. Preemptive rights, ex-rights, and rights-on are terms related to the exercise of subscription rights in a rights issue, but they do not directly relate to the purpose of a poison pill.

A Rights Offer Made to Existing Shareholders with the Sole