chapt 5 - antitakeover measures

Question 1

whats the white knight strategy

Answer 1

friendly individual who will be taking over your cie.

Question 2

explain the poison pill

Answer 2

SE has the right to buy at discount if one SE buy a certain %.
*acquiring the firm = swallow the pill

Question 3

list and explain the 3 types of poison pills

Answer 3

1. Flip over : grant SE with special benef (20% offer, if 100% merger occurs can buy stock in combined firm at 50%)
2. Flip in : almost always accompanies flip over. allow SE buy target at 50% off
3. Voting Plan : Cie issue dividend in preff stock

Question 4

what’s dual capitalization (antitakeover measure)

Answer 4

different classes of stock with different voting right. normally high voting right=less dividend. SE prefer dividend so voting right are exchange to the owners

Question 5

2 states with stronger antitakeovers laws (reincorporation)

Answer 5

california and pennsylvania