Final answer:
The correct answer is 2) lockup agreement.
Step-by-step explanation:
A lockup agreement might be used by target management if the target owns an irreplaceable piece of property, the sale of which would seriously devalue the overall worth of the target. A lockup agreement is a defensive strategy used in the context of mergers and acquisitions to prevent another company from taking over the target company. This strategy is particularly effective when the target company owns a highly valuable asset that, if sold, would make the company less attractive to a would-be acquirer.
The lockup agreement ensures that the valuable asset is either sold to a friendly party under favorable conditions or not sold at all. This hinders the acquirer's ability to own the asset and may deter them from proceeding with the takeover bid altogether. Lockup agreements can sometimes be seen as controversial, as they could also protect management's position at the expense of shareholder value. However, they are a legitimate and common strategy for defending against hostile takeovers.