poison pill

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poison pill

A defensive tactic used to fend off a hostile corporate take over in which a company's board of directors give shareholders the ability to buy shares at discounted prices if any one shareholder (i.e., the one seeking to take over) buys a certain percentage of the company's shares at once, thus forcing the bidding company to spend substantially more in their bid. Sensing that Gangrenous Inc. was looking to acquire their company to exploit its valuable intellectual property, the board of directors passed a poison pill to ward them off.
See also: pill, poison

poison pill

n. an element introduced into the restructuring of a corporation so that it becomes undesirable for another corporation to take over. Acme Corporation approved a poison pill to prevent a hostile takeover.
See also: pill, poison