A shark repellent is an example of what?

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Multiple Choice

A shark repellent is an example of what?

A shark repellent is a defensive measure used by a target company to deter an unwanted acquisition. It falls under takeover defenses because the goal is to make a bid less attractive or more costly, thereby protecting the firm from being acquired. For example, a poison pill gives existing shareholders the right to buy additional shares at a discount if a bidder crosses a ownership threshold, diluting the bidder’s stake and raising the takeover cost. This is a defensive move by the company being pursued, not an action by the bidder. It’s not a hostile bid, nor a dividend policy change, nor merger termination—the latter would be part of the process, not a preemptive defense to prevent a takeover.

A shark repellent is a defensive measure used by a target company to deter an unwanted acquisition. It falls under takeover defenses because the goal is to make a bid less attractive or more costly, thereby protecting the firm from being acquired. For example, a poison pill gives existing shareholders the right to buy additional shares at a discount if a bidder crosses a ownership threshold, diluting the bidder’s stake and raising the takeover cost. This is a defensive move by the company being pursued, not an action by the bidder. It’s not a hostile bid, nor a dividend policy change, nor merger termination—the latter would be part of the process, not a preemptive defense to prevent a takeover.

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