Defenses Against Hostile Takeover for Interco: 1. Shareholder-Rights Plan 2. Voting-Rights Plan 3. Making Acquisition 4. Increasing Debt 5.

Triggered Option Vesting 6. Raising Price by: Improve operational efficiency and reduce costs Pay or promise to pay higher dividends Inform analysts about company strategy, financing policies, and investment programs y Announce profit report/forecast y Asset revaluation y Share repurchase y Terminate overfunded pension 7. Make The Deal Harder to Finance y y y y Use excess cash to pay dividend, buy assets, etc. y Spin off subsudiary y Increasing Debt/Leverage y 8. Change ownership structure 9. Employee severance package

DEFENSE STATEGIES AGAINST HOSTILE TAKE OVER FOR INTERCO

There are some defenses againts hostile take over, here, we would like to propose some defend strategies that could be used by Interco to deter an unfriendly take over. 1. Shareholder Rights Plan Interco actually has considered this plan, and on July 11, 1988 it was amended. The amended rights plan declared that it would issue a dividend one share purchase right per common stock. According to the plan, the massive dilutive effect would be trigerred if a person or group acquire as little as 15 % of the shares of Interco's Stock. By using such plan, Interco could deter the hostile take over, because the effect of dilusion in stocks would make the take over attempt more expensive and become unfavorable. 2. Golden Parachute Interco also has considered this plan and has approved severance agreement for Interco's senior executives valued at $ 16.3 million. This strategy could keep the senior executive objective about the company during any take over attempt. Golden parachute could also deter the take over bid because it could also make the cost of take over become higher. However, the cost of this severance agreement is relatively much lower than the acquisition value of $ 2.6 Billion. 3. Raising the Stock Price Interco also could consider some strategy that could make the take over attempt more expensive. One of the strategy is to raise the stock price of the company so that any take over would need more cost. There are several ways to raise the stock price a. Pay or promise to pay more dividend. By paying or promising dividend would make the stocks of the company more favorable to any investor, then it could lead to the higher price of the company, and any take over attempt would consider the higher price of the company stock. Interco also has good liquidity that would support it to pay more dividend.

b. Repurchase the share By repurchasing the shares, it would signal the market that the stock price currently undervalued. Then, it is hoped that in the near future the stock price would rise and the take over attempt would need more money. The company has ample financial flexibility that allows the use of this strategy c. Make an acquisition By making acquisition of some companies that have good performances would support the growth of Interco, then would also lead to the higher stock price. Interco currently has used the acquisitions to support the growth, furthermore the financial flexibility also could support this strategy. d. Sell the some underperforming subsidiaries Interco could sell the underperforming subsidiaries so that they would not burden the company. By selling these subsidiaries company could also raise the stock price because it could give the signal to the market that the companny has release the burdensome business. Moreover, the company could use the proceeds from sale to acquire more promising companies. 4. Staggered Board of Director Interco could make a defense against take over in the future by applying Staggered Board of Director. The hostile take over attempt would be more difficult because it has to win more than one proxy fights. 5. Super Majority Provision Interco could prevent any hostile take over in the future by applying super majority provision so that the take over would need more voting interest to win the take over process.