ACCA Strategic Professional · Advanced Financial Management · Regulatory framework and processes
Following an unwelcome takeover approach, the board of Target plc sells its most profitable division so that the bidder loses the attraction that prompted the offer. Which defence tactic does this describe?
This is the crown jewels defence. The target sells or transfers its most attractive assets, such as a profitable division, so the bidder loses the main reason for bidding. It differs from a white knight, Pac-Man or poison pill, which involve other bidders, counter-bids or share rights.
- ACrown jewels defenceCorrect
- BWhite knight defence
- CPac-Man defence
- DPoison pill (shareholder rights plan)
Explanation
The crown jewels defence disposes of the most attractive assets so the bidder no longer wants the company. A white knight is a friendly alternative bidder, Pac-Man is a counter-bid for the bidder, and a poison pill gives shareholders rights to buy cheap shares after a trigger.
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