A company adopts a poison pill that allows shareholders (other than the acquirer) to purchase additional shares at a steep discount if any person acquires more than 15% of common stock. What is the primary effect of this defense?

1. AIt dilutes the acquirer's ownership, making a takeover more expensive or unfeasible✓ Correct answer
2. BIt prohibits the acquirer from nominating directors
3. CIt forces the acquirer to abandon all voting rights
4. DIt prevents shareholders from selling any shares for a period of time

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