Series 79 practice questionmediumDeal Protections
A public company enters into a merger agreement containing a no-shop clause but also includes a provision allowing the target board to engage with a third party who makes a bona fide superior proposal. What is this type of provision commonly called?
- AGo-shop clause
- BFiduciary out✓ Correct answer
- CMatching right
- DReverse break-up fee
Explanation
Why B — Fiduciary out
A fiduciary out permits the target’s board to consider superior proposals to fulfill its fiduciary duties. This distinguishes it from a strict no-shop, which could prevent the board from acting in shareholders’ best interests.
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