Which of the following statements explains the Poison pill strategy ........

Economic Affairs Investment Models

Which of the following statements explains the Poison pill strategy?

The company will pay the acquirer to go away and stop threatening the company with a hostile takeover.

Company spinning off its most valued asset, in order to make the acquisition less desirable for the acquirer.

Existing shareholders, excluding the acquiring entity, purchase additional shares at a discounted rate.

Company will prevent a hostile takeover by initiating a reverse takeover.

Poison Pill is a corporate defense strategy utilized by a target company to prevent or discourage hostile takeover attempts. Under this mechanism, existing shareholders, excluding the acquiring entity purchase additional shares at a discounted rate making it difficult for the acquirer to establish a majority stake in the company. Hence option 3rd is correct.