Discourage unwanted bidder

Xon Enterprises is attempting to make a hostile takeover of the target, Rayon Group. After receiving Xon Enterprises hostile takeover offer, Rayon’s shareholders have the right to buy additional shares at a below-market price if Xon buys more than 15% of Rayon’s outstanding shares. Identify the takeover defense strategy employed by Rayon Group. Explain why it is used and how does it discourage unwanted bidder.

 

 

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