"Just Say No" Defense
A strategy used by corporations to discourage hostile takeovers in which board members reject a takeover bid outright. The legality of a just say no defense may depend on whether the target company has a long-term strategy that it is pursuing, which can include a merger with a firm other than the one making the takeover bid, or if the takeover bid simply undervalues the company.
A just say no defense isn't necessarily in the best interest of shareholders, since board members can employ it even if an offer is made at a significant premium to the current share price.
The case of Paramount Communications vs. Time, Inc. helped establish the just say no defense as a viable anti-takeover strategy. In the case, Time, Inc. was set to merge with Warner Communications, but received a bid from Paramount that its board rejected because there was a long-term plan.
Investment dictionary. Academic. 2012.
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