A Problem with the Tender Offer Mechanism in a Takeover

question 20

Multiple Choice

A problem with the tender offer mechanism in a takeover is the ______.The term refers to a situation in which rational behavior by each individual shareholder results in shareholders as a group being worse off.If individual target shareholders (correctly) foresee that the value of their shares will be worth more after the takeover than they will receive in the tender offer, they will choose not to tender their shares.

• A)holdover problem
• B)free rider problem
• C)holdout problem
• D)non-tender problem