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ACCA Strategic Professional · Advanced Financial Management · Regulatory framework and processes

Which defence is most likely to be classed as a pre-bid (structural) defence, rather than a defence implemented after an offer has been made?

Staggered board terms and supermajority voting requirements for a merger are pre-bid defences. They are built into the company's constitution before any offer to make control harder to obtain, whereas defence documents, Pac-Man counter-bids and white knights are used only in response to an actual bid.

  1. AIssuing a defence document that argues the offer undervalues the company
  2. BIntroducing staggered board terms and supermajority voting requirements for a mergerCorrect
  3. CMaking a counter-bid for the bidder (Pac-Man defence)
  4. DPersuading a white knight to make a rival offer

Explanation

Staggered boards and supermajority clauses are put into the constitution in advance to make a hostile takeover harder. The other options are all reactions taken once an offer has been made.

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