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
References in periodicals archive ?
Using poison pills for committing suicide is an eye opening for society.
the Delaware Supreme Court established the validity of poison pills. In
Boards in the United States are entitled to "just say no" to a proposed bid and to use defensive tactics, such as poison pills, to prevent (as opposed to simply delay) a bid.
The 2004 poison pill plan was to thwart John Malone and Liberty Media Corp.
The poison pill "puts a damper" on the chance for a "friendly dialogue," Icahn was quoted as saying by Reuters.
1980s reached full force and before poison pills were developed as a
There has been a spirited debate in the academic literature over the societal merits of takeover defenses in general and poison pills in particular.
Poison pills present a more potent protection to the board facing a hostile tender offer than the control-share statute.
The apothecary who sold the poison pills swears they were coated with gold and would pass through the senator's system harmlessly.
Furthermore, the results support the proposition that firms, which adopt poison pills, are not meeting the demands of their stakeholders.
Poison pills issue preferred shares to shareholders in the event of a hostile-takeover attempt, which makes it more difficult for a bidder to acquire the company.
The Federation of German Industries (BDI) is in favour of an option by which both multiple voting rights and poison pills would be permitted as valid ways to frustrate takeover bids.
Our empirical investigation examines the changes in stockholder wealth associated with the adoption of poison pills under different governance structures.
Some shareholders scored wholesale victories in their various public campaigns ranging from proxy contests to forcing companies to submit poison pills for approval.
The stock market tends to react neagatively to poison pills (Malatesta and Walking, 1988; Ryngaert, 1988; Securities and Exchange Commission, 1986).