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Flip-Over Pill

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Flip-Over Pill
A provision in some antitakeover measures stipulating that shareholders on the receiving end of a hostile takeover may buy shares in their own company at a price below fair market value. Once the acquisition is complete, the provision allows these same shareholders to buy more shares in the new company for below market value. This forces shareholders in the acquiring company to suffer a devaluation and dilution of their own shares. This is done to discourage hostile takeovers among the shareholders of the acquiring companies. See also: Dead-hand poison pill.

flip-over pill
An entitlement granted by a firm's management to its stockholders giving them the right to purchase shares of an acquiring company's stock at a bargain price in the event of a merger. The flip-over pill is a variation of the poison pill.


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