6. Defending against mergers

Firms facing hostile takeovers often take actions to forestall the acquisition.

For instance, a firm could seek help from another company to become a friendly acquirer of a target firm and protect itself from a hostile takeover. Such tactics are referred to as _____ .

Options are : White Knights or White Squires

Denton Manufacturing has made a tender offer for Hynde Industries. Both companies are relatively large firms in the automobile parts industry. Which of the following likely would be the most effective defence tactic for Hynde to take against this merger?

-Raising antitrust concerns to the Justice Department

-Waiting for a white knight to compete with Dentons offer

-Issuing new common stock

Kathy works for an investment bank in the corporate finance division. Along with the typical functions in her job role, such as finding a potential target company for a client which would add synergistic value to the client, finding a potential acquirer for a client, developing defensive tactics, establishing a fair value and financing operations, Kathy also works with her team in conducting arbitrage operations.

Based on your understanding of arbitrage operations complete the following sentence:

In a recent trade, Kathy was assigned to buy 10% of a clients shares from the open market at $45.50 per share and sell the shares at a price of $46.20 to a private investor, pocketing a return for her firm. Kathy was involved in __.

Options are: Pure arbitrage or risk arbitrage