X Ltd. makes a bid to purchase Company Y Ltd. Y Ltd. rejects the bid and thereafter used a strategy against X Ltd. to stop the acquisition, Y Ltd. sold off its cement, chemical, and aluminium divisions and borrowed over

The name of the strategy is called "scorched earth approach". This approach is highly aggressive, and potentially self-destructive takeover defense strategy used by target companies to evade a hostile bid. It is a more extreme form of the "crown jewel" strategy in which the central theme is to divest the most coveted asset (known as crown jewel) Consequently, the hostile bidder is deprived of the primary intention behind the takeover bid. "Scorched earth approach" is a variation of the crown jewel strategy and more radical in approach as the target not only sells off the crown jewel asset, but also properties to diminish its worth. Risks and Consequences Self-Destruction ("Suicide Pill"): The strategy is so extreme that it can lead to the destruction of the company's own value, making it difficult to recover even if the takeover is prevented. Business Failure: The long-term impact of losing core assets, coupled with high debt, can lead to bankruptcy or liquidation. Legal Challenges: The acquiring company may seek a court injunction to stop these actions, viewing them as a violation of fiduciary duties. Shareholder Backlash: Because this method often destroys value, it can lead to a revolt from shareholders who would prefer the value offered by the acquirer.