Question

The Rebellion Inc., is trying to fight off the Empire in an unwanted merger. Below is a list of options that The Rebellion is able to use in order to ward of this merger.

There is only one option they are not allowed to use, which one is it?

The Rebellion would like to get a white squire to purchase the stock in their company.

The Rebellion would like to get white knights to bid for their company.

The Rebellion would like to repurchase the stock in their company.

The Rebellion would like to change the bylaws to abolish supermajority voting requirements.

The Rebellion would like to bring up antitrust issues.

Answer 1

Answer:-

The last option to bring up antitrust issues is NOT allowed to ward of merger.

The first three options white squire, white knights and repurchase the stock are post-offer defense mechanisms to ward of unwanted merger.
The fourth option of change the bylaws to abolish supermajority voting requirements is a pre-offer defense mechanism to ward of unwanted merger.

The last option of bringing up antitrust issues is neither a pre or post offer defense mechanism to ward of the unwanted merger. For example the merged entity may have to deal with monopoly, like market share going beyond the certain limit defined judged by industry concentration and measured by Herfindahl-Hirschman Index (HHI). In this case the pre and post merger values of HHI are calculated and in certain case there will be an antitrust challenge against the merged entity. There can also be other antitrust issues related to mergers.