poison pill

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Poison pill

Anti-takeover device that gives a prospective acquiree's shareholders the right to buy shares of the firm or shares of anyone who acquires the firm at a deep discount to their fair market value. Named after the cyanide pill that secret government agents are said to be instructed to swallow if capture is imminent.

Poison Pill

An antitakeover measure 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. It is important to note that a poison pill need not use both of these tactics; sometimes it utilizes only one or the other.

poison pill

An antitakeover tactic in which warrants are issued to a firm's stockholders, giving them the right to purchase shares of the firm's stock at a bargain price in the event that a suitor hostile to management acquires a stipulated percentage of the firm's stock. The poison pill is intended to make the takeover so expensive that any attempt to take control will be abandoned. See also flip-over pill, Jonestown defense, macaroni defense, suicide pill.

poison pill

see TAKEOVER BID.
Point elasticityclick for a larger image
Fig. 143 Point elasticity.

poison pill

see TAKEOVER BID.
References in periodicals archive ?
Delaware Chancellor Andre Bouchard rejected the retirement plan's arguments, stating that the way the 2013 spinoff of News' print and digital products into a new company was structured meant that the poison pill settlement actually was with the business now known as 21st Century Fox.
the respected corporate governance analytics and proxy voting firm, says in its proxy voting guidelines that it generally recommends voting against poison pills as they "are not conducive to good corporate governance" and "can reduce management accountability.
has agreed to put forth a special proposal at its annual meeting this October, allowing shareholders to vote on whether to extend the poison pill for two years.
Although managers generally initiate antitakeover corporate charter amendments, shareholders have to approve them, with the exception of poison pills.
Circuit City said its board and management reviewed the shareholder-rights plan after its most-recent annual meeting in June and determined that terminating the poison pill was "appropriate and responsive" to shareholder votes at the past two annual meetings.
In the 1999 proxy season, companies continued to adopt or renew poison pills at a torrid pace.
Opponents of the rights plan charged that poison pills prevented shareholders from receiving and accepting tender offers.
adopts a plan to provide its shareholders with poison pill rights--including rights to purchase preferred stock following a triggering event.
Glass Lewis said that poison pills are generally "not conducive to good corporate governance.
According to Glass Lewis, "in general, poison pills are not conducive to good corporate governance" and "they can reduce management accountability.
THE PILL'S INGREDIENTS The Mechanics of the Pill The Judicial Response IV ADAPTIVE RESPONSES TO THE PILL Corporate Governance Responses Strategic Responses Activist Investors and Shareholder Rights By-Laws Anti-Takeover Statutes Modifications to Poison Pills V WHY CANADA IS DIFFERENT Canadian Securities Regulatory Framework Structure of Canadian Capital Markets Duties of Directors in Canada Canadian Regulatory Philosophy Canadian Poison Pill Jurisprudence Suggestions For the Future VI CONCLUSION