suicide pill

Suicide Pill

A defensive strategy by which a target company engages in an activity that might actually ruin the company rather than prevent the hostile takeover. Also known as the "Jonestown Defense."

Notes:

This is an extreme version of the poison pill.

See also: Busted Takeover, Enterprise Value, Hostile Takeover, Jonestown Defense, Management Buyout (MBO), Merger, Poison Pill, Sandbag, Saturday Night Special, Scorched Earth Policy, Shark Repellent, Sleeping Beauty, Voting Shares, Whitemail

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Suicide pill

A hostile takeover prevention tactic that could destroy the target company. Taking on a large amount of debt to prevent the takeover might cause bankruptcy, for example.

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suicide pill

A poison pill provision so devastating to the target of a takeover attempt that the target company may have to be liquidated to satisfy its creditors. For example, the company's directors may institute a suicide pill giving stockholders the right to exchange their stock for debt if a raider acquires more than a specified percentage of the company's outstanding shares. The tremendous increase in debt will effectively doom the target company if the takeover attempt is successful.