Series 79 practice questioneasyDeal Protections
A no-shop clause in a merger agreement typically prohibits the target from doing which of the following?
- ASoliciting competing acquisition proposals✓ Correct answer
- BPaying a breakup fee under any circumstances
- CDiscussing the transaction with its own shareholders
- DProviding confidential information to its board of directors
Explanation
Why A — Soliciting competing acquisition proposals
A no-shop clause restricts the target from soliciting competing offers, although it may still have fiduciary outs. The other activities are not generally restricted by such a clause, making them common distractors.
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