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Simple English definitions for legal terms
crown-jewel defense
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A quick definition of crown-jewel defense:
Term: Crown-Jewel Defense
Definition: Crown-jewel defense is a strategy used by a company to protect itself from a hostile takeover. If a company is threatened with a takeover, it may agree to sell its most valuable assets to a third party, making itself less attractive to the hostile bidder. This is done to prevent the takeover and protect the company's interests. It is similar to a game of chess, where the company is trying to protect its most valuable pieces, or "crown jewels," from being taken by the opponent.
A more thorough explanation:
Crown-jewel defense is a strategy used by a company to prevent a hostile takeover. It involves selling off the company's most valuable assets to a third party if a hostile bid is made. This makes the company less attractive to the potential buyer.
For example, if a company is being targeted for a takeover, it may sell off its patents, trademarks, or other valuable assets to a third party. This makes the company less valuable to the potential buyer, and may discourage them from pursuing the takeover.
Another example is if a company has a valuable subsidiary, it may sell that subsidiary to a third party to prevent the hostile takeover. This can make the company less attractive to the potential buyer, and may discourage them from pursuing the takeover.
These examples illustrate how crown-jewel defense can be used to protect a company from a hostile takeover. By selling off valuable assets, the company becomes less attractive to the potential buyer, and may discourage them from pursuing the takeover.