CS Executive · Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts
Meridian Textiles Ltd, facing a hostile bid from Rathore Holdings, invites Sundaram Industries, a friendly company, to make a rival offer on terms more favourable to Meridian's management. Sundaram's role is best termed:
Sundaram Industries acts as a white knight, because it is a friendly company invited by the target to make a rival offer and rescue the target from the hostile bidder. The hostile bidder, Rathore, would be the raider; greenmail and shark repellents are different concepts.
- ARaider
- BWhite knightCorrect
- CGreenmailer
- DShark repellent
Explanation
A white knight is a friendly acquirer invited by the target to rescue it from a hostile bidder. A raider is the hostile bidder itself, which is Rathore here. Greenmail is buying a stake and selling it back at a premium, and shark repellent refers to charter amendments that deter bids.
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