When the target company uses the tactic of divestiture, to defend itself from a hostile takeover, it is said to sell the :
Crown jewels
Option 1 — Crown jewels is correct.
In a hostile takeover the acquirer usually covets the target’s most valuable and attractive assets or divisions — its ‘crown jewels’. Under the crown-jewels defence the target deliberately sells or spins off those prized assets (a divestiture), so that it becomes far less appealing and the raider withdraws.
Why the other options are wrong:
| Term | What it really means |
|---|---|
| Green mail | Buying back the raider’s shares at a premium to make them go away |
| Golden parachutes | Large severance payouts promised to top executives if they are ousted after a takeover |
| White knight | A friendly third party invited to acquire the target instead of the hostile bidder |
Only the crown-jewels tactic involves selling off assets by divestiture, which is exactly what the question describes.
Takeaway: Selling the prized assets (divestiture) to repel a raider is the crown-jewels defence.
Similar Questions
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Who among the following has given the statement : “transition from single function focus to a multi function focus is essential for successful strategic management”?
__________ signals a strategic inflection point necessitating a radical strategic shift.
Match the items of List - I with List - II and select the code of correct matching :
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Which among the following is not a generic strategy ?
Which one among the following is not a correct statement ?
Which of the following statements is not correct about strategic management ?
Vertical merger is the merger of two firms which are involved in which one of the following forms ?
Michael E. Porter’s five generic strategies are :
“Pepsi Co launched a hostile take over of Pepsi Bottling Group after its $ 4.2 billion offer was rejected”. Which strategy was used in this case ?
Important Questions from Strategic Management
When the organizational requirements advocate tight cost control; frequent, detailed control reports; structured organization and responsibilities and incentives based on meeting strict quantitative targets then it is called:
Which of the following strategies are types of combination strategies?
(A) No change strategies
(B) Pause/Proceed with caution strategies
(C) Turn around strategies
(D) Profit strategies
(E) Concentration strategies
As per Henry Mintsberg, which of the following is NOT a part of his conception of types of strategies?
- Strategic Management involves :
(a) Assessment of external environment
(b) Identification of subsystem
(c) Unity of command
(d) Span of control
(e) Assessment of resources and capabilities
(f) Identification of goal
Code : Put the following steps of strategic Management Process in correct sequence :
a. Scanning and Evaluation of Business Environment
b. Formulating strategies
c. Implementation of Corporate Strategy
d. Deciding about the Mission of the organisation
e. Setting Corporate Level Objective
Codes :
