What Is the Main Lesson Learned from Investor Carl Icahn's

question 18

Multiple Choice

What is the main lesson learned from investor Carl Icahn's bid to purchase Clorox Co.?

• A) Boards will only defend against takeover attempts if their companies are performing poorly.
• B) The situation demonstrates two possibilities. First, Clorox was underperforming and the market for corporate control disciplined managers to improve performance. The second possibility was that investors sometimes take over companies that are performing well.
• C) Boards commonly make mistakes in rejecting takeover bids as shown in the case of Icahn's bid for Clorox Co.
• D) Clorox was clearly underperforming and Icahn's bid was a good example of the efficiency of the market for corporate control.

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Definitions:

Labor

The effort by people to produce goods or services that have economic value.

Event Timing Forecast

The prediction of when certain events are likely to occur, often used in planning and strategy development.

Market

An economic system that allows buyers and sellers to exchange goods and services.

Price War

A price war is a competitive situation in which retailers or suppliers repeatedly cut prices in order to undercut competition, often to the point where the prices are unsustainable in the long term.