Such a strategy is useful only if a company issues convertible securities, such as convertible debentures, convertible warrants, convertible preference shares, and convertible bonds. Basically, it ensures that large shareholders are not able to add to their voting rights. In this strategy, the target firm may come up with a rule that prevents big shareholders from converting their securities into voting stocks. Such a defense aims to catch big targets while leaving small ones. This would reduce the value and charm for the hostile bidder, and the company can survive from such a bid. The Israeli firm (Taro) used strategies like selling its Irish unit and not disclosing financials to keep Sun Pharma away. Something similar was the case in the merger of Sun Pharma and Taro. Also, the target company may spin off those key assets to create a separate entity altogether. In this, the target sells its valuable assets or “crown jewel” in the open market or to a rival.
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