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

Which of the following is a pre-bid (preventive) defence against a takeover rather than a post-bid (reactive) defence?

A poison pill rights plan is a pre-bid defence because it is adopted before any bid arrives and is triggered when a bidder builds up a stake. White knights, profit forecasts and Pacman defences are all reactive measures used after an offer is announced.

  1. AIntroducing a 'poison pill' rights plan that is triggered when a bidder acquires a threshold stakeCorrect
  2. BSeeking a white knight after the bid is announced
  3. CIssuing a profit forecast to persuade shareholders that the offer undervalues the company
  4. DLaunching a Pacman defence by bidding for the predator

Explanation

A poison pill is put in place before any bid is made, so it deters bidders in advance. The other three actions are taken only once a bid has been announced, so they are reactive defences.

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