In addition to the preemptive devices we discussed in another lesson, a target’s board of directors can employ several other antitakeover defenses in response to a hostile-takeover bid. These reactive defenses are designed to either thwart the takeover attempt directly or make the target company less attractive to the hostile bidder.

Imagine that Iron Paradise, a leading chain of high-intensity training gyms, wanted to diversify its offerings by acquiring ZenDen, a popular online yoga company....