How does a toehold help overcome the free riderproblem?

(Select the best choicebelow.)

A. Since the free riders gain the full amount of the value improvement on the shares acquired as atoehold, the free riders are likely to sell their shares to theacquirer, allowing the takeover to go forward.

B. Free riders usually acquire a toehold in order to give an incentive for an acquirer to take over the remainder of the company and providevalue-added improvements.

C. Since the acquirer gains the full amount of the value improvement on the shares acquired as atoehold, a toehold provides an incentive to undertake theacquisition, even if the acquirer must pay a price equal to thewith-improvement value for the rest of the shares.

D. Once the acquirer has atoehold, free riders no longer can make as much money as they would have and are more likely to tender their shares to the acquirer.