Question

X Corp. and Y Corp. are separate entities. In Year 4, X Corp. extended a hostile tender offer directly to the shareholders of Y Corp. Y Corp. immediately issued bonds and offered to repurchase its own stock from its current shareholders at an amount higher than the current market price. The action by Y Corp. is best described as a(n) Issuance of stock strategy. Legal action strategy. Self-tender strategy. Compulsory share exchange strategy.

Answer 1

The action by Y Corp. is best described as a C. Self-tender strategy.

What is a self-tender strategy?

A self-tender is a defense strategy that thwarts a hostile corporate takeover.

Using a self-tender strategy as described in this scenario involves Y Corp. making a tender offer for its shares, inviting its shareholders to sell their shares so that the company can repurchase them at a specified favorable price.

This self-tender strategy closes off X Corp's efforts to succeed with the hostile tender offer.

Thus, the action by Y Corp. is best described as a C. Self-tender strategy.

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