3. Defending against mergers Aa Aa Many mergers are the result of a friendly and collaborative agreement between the participating companies. Some combinations, however, are unfriendly or even hostile in nature. Firms facing unwanted and hostile takeovers will often take actions to forestall the acquisition. In general, the broad category of antitakeover strategies are called Consider the following technique: This type of financial security will have value only if an unfriendly takeover occurs. It gives the firm's bondholders the right to redeem their bonds at their par value prior to maturity if a unfriendly bidder obtains control of a specified percentage of the target firm's common shares. This technique, which is called , is designed to: O Make the takeover target a less attractive takeover candidate by restructuring its debt and reducing its available cash balances O Make it difficult for an acquiring firm to elect its own directors to the board O Make it significantly more difficult for the takeover vote by the firm's shareholders to be successful