The “just say no” defense is a strategy used by boards of directors to prevent hostile takeovers by outright rejecting a takeover bid.
Named after Nancy Reagan’s “Just Say No” anti-drug campaign, this strategy gives the board of directors the power to decide whether or not to accept an acquisition offer.
Such a stance can be taken in order to make a takeover impossible or to encourage better offers either from the same bidder or, better yet, from a friendly white knight.
The legitimacy of the “just say no” defense may depend on whether the target company has a long-term strategy or whether the takeover bid undervalues the company.
“Just say no” protection is one of many strategies to prevent hostile takeovers. Others include the poison pill strategy and the white knight strategy.