Question

Firms use defensive tactics to fight off hostile takeovers. These tactics do not include:

		Adopting a staggered board.
		Getting white knights to bid for the firm.
		Ask white knight to acquire them in defensive merger.
		Changing the bylaws to eliminate staggered board.
		Changing the bylaws to include a poison pill provision.

Answer 1

Firms use defensive tactics to fight off hostile takeovers. These tactics do not include:

Ask white knight to acquire them in defensive merger.

Insted it focus on, White Knight Defense:

If a board feels like it cannot reasonably prevent a hostile takeover, it might seek a friendlier firm to swoop in and buy a controlling interest before the hostile bidder. This is the white knight defense. If desperate, the threatened board may sell off key assets and reduce operations, hoping to make the company less attractive to the bidder.

Typically, the white knight agrees to pay a premium above the acquirer’s offer to buy the target company’s stock, or the white knight agrees to restructure the target company after the acquisition is completed in a manner supported by the target company’s management.