Explore BrainMass

Corporate anti takeover mechanisms/ strategies

I would like to know what are the strategies that a corporate use to anti takeover? How does it work? By the way, what is Poison Pill?

Solution Preview


Anti-Takeover Strategies

Anti Takeover Strategies
A corporation may use the various anti takeover strategies to prevent itself from the hostile takeover or acquisition. Following are the some proactive strategies that is used by the corporation to anti takeover -
Poison Pills - It is the most common and effective strategy that is used by the corporation to anti takeover. In this strategy, the target company adopts the strategies that make its stock less attractive for the acquirer company. It discourages the hostile takeover by making the stock of the target company much unattractive. This strategy is used in two types one is flip-in, in which existing shareholders may buy more shares at discount price and second is flip-over, in which the shareholders may buy the shares of acquirer at discount price. It makes the takeover less valuable for the acquirer company (Gaughan, 2007).
Through the flip-in, the purchasing of shares at cheaper ...

Solution Summary

Corporate anti takeover mechanisms/ strategies are examined.